Earned wage access is gaining ground in Asia

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

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

These solutions target people who are struggling to make ends meet between paychecks, offering them an alternative to payday loans, which have been widely criticized as predatory for charging inflated interest rates and trapping borrowers in debt.

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

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

Global VC offers for earned wage access, Source: PitchBook

Global VC offers for earned wage access, Source: PitchBook

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

Last year digital bank Revolut started its own EWA offering called On Demand Pay. The feature allows employees to get instant access to a portion of their salary as they earn it.

Mastercard in April 2021 announced partnered with UK payroll platform provider Hi55 to launch a market-leading payroll access card, allowing people to access their payroll as soon as they earn it.

In the US, prepaid debit card provider Netspend started in September 2021, its EWA platform and mobile app, which enable companies to provide employees with access to accrued wages when needed.

And CloudPay, a UK company specializing in employee pay solutions, introduced in July 2021 CloudPay NOW, its proprietary EWA solution enabling multinational organizations to offer pre-payday EWA via a global technology solution.

In 2022, the momentum continues, with the trend now gaining momentum in Asia, as evidenced by recent fundraising rounds for startups in the industry:

  • Refyne, India’s first EWA platform, closed an $82 million funding round in January to scale, expand into multiple geographies, develop more products, increase product awareness and hire more employees;
  • Wagely, an Indonesian EWA provider, earlier this month raised $8.3 million in a pre-Series A funding round to fuel its expansion in Bangladesh, where it was recently startedand built other capabilities to become a “holistic financial wellness platform,” including savings, insurance, long-term installment loans, and financial education;
  • Paywatch, an EWA startup operating in South Korea and Malaysia, behaved US$5.3 million in seed funding to be used to expand into new Southeast Asian markets including Indonesia and the Philippines; and
  • GetPaid, an EWA startup from Singapore, closed a $1.15 million funding round in January to scale and expand its EWA product across Southeast Asia.

Last year, Israeli fintech startup PayKey announced the availability of its white-label solution in the Philippine market. PayKey plans to partner with local banks to offer its technology called it has had “advanced discussions 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 $108 million Series C funding round in January 2022 to expand its suite of digital financial services for small and medium-sized businesses (SMBs), which includes business accounts, credit cards, working capital, invoicing, factoring, treasury management and EWA includes.

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