New service PaySauce lets you spend your salary - before payday

Many workers find it tough waiting for payday, but resorting to payday lenders who charge sky-high interest can leave borrowers owing money they can't pay back.

Lenders often charge interest rates of 500 percent and more, turning small initial loans into a mountain of debt.

But now a new service will offer an alternative. A New Zealand payroll company is launching a service allowing employees to access their pay any time before payday.

PaySauce hopes the first-in-Australasia service will put a stop to payday lenders trapping people with high-interest loans.

It works like this: say you earn $800 each fortnight, but you need cash a week early.

You can take an interest-free advance on the money you need, and have that deducted from your next pay check. All it would cost is $3, regardless of the amount advanced.

PaySauce chairman Andrew Barnes, who made headlines trialling the four-day working week at Perpetual Guardian, says he wants to stop vulnerable people being trapped by high-interest loans.

"We are creating a service whereby any day can be payday," he told Newshub.

"We don't expect this to be a major money spinner for PaySauce - that's not why we're doing it. We don't think there is any place in a civilised country for payday loans of 500 and 600 and 700 percent."

The Salvation Army says while it supports any system that stops people resorting to high-interest lenders, it doesn't address the wider issue of financial literacy.

"We're not actually building the financial knowledge and capacity of people - it just means they're using their own money to pay down debt," says Salvation Army advisor Ronji Tanielu.

PaySauce will launch its pilot to small and medium enterprises on September 21.

"This is not a solution to the underlying problem of budgeting, of making ends meet, but what it is is a method that doesn't make it any worse," Mr Barnes says.