Access to earned wages becomes fashionable in Asia

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The past year was awash with news of funding rounds and product launches related to Earned Wage Access (EWA) in what seems to have become one of the hottest topics in the fintech world right now.

EWA, also known as payday advance, is a financial service offered to employees, mostly hourly and low-wage workers, that gives them access to their accumulated wages before the end of their payroll cycle.

These solutions are aimed at people who have difficulty making ends meet between paychecks, providing them with an alternative to payday loans that have been widely criticized as predatory for charging excessive interest rates and luring borrowers into traps. of debt.

In recent years, fintech startups have sprung up to challenge payday lenders. Some of these startups partner with employers and integrate into their payroll system to provide users with money they’ve earned working for the company. Others don’t work for employers at all, and instead request access to a user’s bank account to determine if and how much it makes sense to advance the user money.

The business concept has also aroused the interest of investors. In 2021, seven startups offering EWA products raised US$1.13 billion in debt and equity, exceeding the total funding raised between 2015 and 2020. according to the PitchBook data.

Global venture capital deals in access to earned wages, Source: PitchBook

Global venture capital deals in access to earned wages, Source: PitchBook

The broader financial ecosystem has also caught up with the trend, with companies from all parts of the industry jumping on the bandwagon.

Last year, the digital bank Revolut thrown out its own EWA offering, called On Demand Pay. The feature allows employees to gain instant access to a portion of their salary as they are earned.

In April 2021, Mastercard Announced a partnership with UK-based payroll platform provider Hi55 to launch a first-to-market salary access card, allowing people to access their pay as soon as they’ve earned it.

In the US, prepaid debit card provider Netspend thrown out in September 2021, its EWA platform and mobile application, which allows companies to offer their employees on-demand access to accrued wages.

And CloudPay, a UK company specializing in payment solutions for employees, inserted in July 2021 CloudPay NOW, its own EWA solution, which enables multinational organizations to offer EWA before payday through a global technology solution.

In 2022, the momentum continues with the trend now gathering steam in Asia, as evidenced by recent fundraising rounds that went to startups in the sector:

  • Refyne, India’s first EWA platform, closed an $82 million funding round in January to scale, expand to different geographies, develop more products, spread product awareness, and hire more people;
  • Wagely, an Indonesian EWA provider, raised $8.3 million in a pre-Series A funding round earlier this month to fuel its expansion into Bangladesh, where it recently thrown outand created other functions to become a “comprehensive financial wellness platform”, including savings, insurance, long-term installment loans, and financial education;
  • Paywatch, an EWA startup operating in South Korea and Malaysia, high US$5.3 million in seed funding that it plans to use to expand into new markets in Southeast Asia, including Indonesia and the Philippines; and
  • GetPaid, an EWA startup from Singapore, closed a US$1.15 million funding round in January to scale and expand its EWA product in Southeast Asia.

Last year, Israeli fintech startup PayKey announced the availability of its white-label solution in the Philippine market. PayKey plans to work with local banks to offer its technology and said it has been in “advanced talks with some leading banks” in the country.

In Indonesia, where access to affordable and effective financial services remains an issue for small businesses, business-focused fintech service provider KoinWorks closed a US$108 million Series C funding round in January 2022 to scale its suite of digital financial services for small and medium-sized businesses (SMBs), including business accounts, credit cards, working capital, billing factoring, treasury management and EWA.

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