Earned Wage Access (EWA) has become one of the hottest topics in the fintech world, and new product launches and mega funding rounds have flooded the news in the market.
EWA, also known as Early Payday is a financial service offered to employees of firms, which provides them with access to their accrued wages before the end of any payday cycle. This is a welcome alternative to payday loans, which have been criticized for exorbitant interest rates, and pushing borrowers into debt. EWA is aimed at those persons who have difficulty making ends meet between salary cycles.
Especially in the last few years, several fintech startups have emerged to challenge existing payday lenders. Some of these fintech startups partner with employers and integrate into their payroll system, allowing employees to access money that they have earned working for the company. Other fintech startups follow a different model, and request access to users’ bank accounts to determine if they are eligible to receive funds against their accrued salary.
The concept of EWA as a business has also intrigued investors in recent years. Seven startups raised more than USD 1.1 billion in debt and equity in 2021, more than all the funding the sector received between 2015 right up to 2020. Other companies in the ecosystem have also caught onto the EWA trend, with companies from all over Asia getting involved.
In 2020, Revolut, a digital bank, launched its EWA offering, named as On Demand Pay. The offering allows users to gain access to a part of their salary as they earn it.
In April last year, Mastercard announced an alliance with Hi55, a UK-based provider of a payroll system, to launch a salary access card, enabling people to access their pay as soon as they earned it. This was a first-of-its-kind offering for the market.
Not to be left behind, US-based debit card provider launched its EWA platform and mobile app, enabling business houses to offer employees on-demand access to their accrued wages.
Another UK company, CloudPay, introduced CloudPay NOW, a proprietary EWA solution for multinational companies allowing them to offer EWA in advance of payday with a global technology platform.
This year, the trend picked up in Asia, as was evident from the recent funding rounds in the region.
EWA Fintech startups across Asia receive funding
Refyne, India’s first EWA platform, raised US$82 million in funding in January, to expand into different geographies, scale, develop more products, spread awareness about the product and hire more people
Wagely, an Indonesian EWA provider, raised US$8.3 million in a pre-Series A funding round earlier this month to power its expansion in Bangladesh, where it recently launched, and build other features to become a holistic financial platform including savings, insurance, long-term installment loans and financial education
Paywatch, an EWA startup founded in South Korea and Malaysia, raised US$5.3 million in seed funding which it plans to use to expand into other Southeast Asian markets, including Indonesia and the Philippines
GetPaid, an EWA startup from Singapore, closed a US$1.15 million financing 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-labeled solution in the Filipino market. PayKey plans to work with local banks to offer its technology and said it has been in talks with some of the leading banks in the country.
In Indonesia, where access to affordable and effective financial services remains an issue for small companies, business-focused fintech services 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 enterprises (SMEs), which includes business accounts, credit cards, working capital, invoicing factoring, treasury management and EWA.
As these fintech startups forge ahead in Asia, the markets are closely observing the impact they will have on employees across the salaried system, and also how the best companies will scale up.