Participating buyers embody XYZ Ventures, Village Global, Musha Ventures, Voltron Capital, Ventures Platform and Paystack CEO Shola Akinlade.
Earnipay, which has been in beta since September 2021 and solely launched final month, plans to provide its on-demand wage resolution to 200,000 employees by the tip of 2022.
Most of Africa’s workforce is paid month-to-month however stay paycheck to paycheck. Unlike extra developed nations just like the U.S., the place weekly or bi-weekly salaries can maintain this life-style, low month-to-month wages — which is the norm in Africa — can’t. So what finally ends up occurring is that income-earners takes wage advances or borrow cash from payday lenders and loan sharks to offset their day by day bills and emergencies, finally falling right into a debt cycle.
A couple of particular person companies have sought to deal with this drawback internally and permit employees to access their day by day salaries as they work for it. Earnipay founder and CEO Nonso Onwuzulike tried this whereas operating Reaval, a Ghana-based recycling enterprise he began on the aspect in 2019.
His employees have been waste collectors from the casual sector, with a historical past of accumulating day by day or weekly funds. On the opposite hand, Onwuzulike who had labored most of his life in the formal sector — even holding the place of nation supervisor of Bolt Ghana throughout this era — was accustomed to paying and receiving month-to-month salaries, which brought on issues for his recycling enterprise.
“There were adverse effects of that long wait time between pay cycles, especially for these people who didn’t earn a lot of income,” mentioned the founder describing the wage scenario at his former firm. “They ended up not being productive because they had money issues and it led to attrition and retention problems for me because these were guys who are used to getting paid immediately, but I was paying them once a month, and it didn’t make sense to them.”
Onwuzulike developed an answer to make their fee versatile: weekly or bi-weekly. He then figured he may scale it to firms in the formal sector and tright here was information to again this resolution. Per a survey carried out amongst a number of income-earners who labored in the formal sector, about 80% of them most well-liked having versatile access to their salaries fairly than the wage advance choice popularly pioneered by banks. That’s how Earnipay got here to be, with Busayo Oyetunji and Joshua Ajayi becoming a member of as COO and CTO respectively.
Earnipay is constructing what is thought globally as an earned wage access platform. But Onwuzulike describes the corporate as a monetary wellness resolution for employees, of which its first product is on-demand wage access.
The platform integrates with firms’ current payroll or HRM programs to provide its providers to employees, who can then observe and withdraw their accrued salaries by way of the app.
Employees’ salaries are prorated day by day and firms can set limits for the proportion of salaries employees can withdraw every month. For occasion, if an worker earns ₦300,000 month-to-month, they’ll get ₦10,000 day by day (for 30 days) or ₦15,000 (if the employer units the system to depend solely workdays; 20 in this case).
The founder mentioned that Earnipay makes these funds on behalf of the corporate, particularly these whose money move might be affected ought to they finance the funds themselves. At the tip of every month, they reimburse Earnipay. But for others who can afford to make these funds, Earnipay units up a reconciliation account on high of the employees’ wage accounts scheduled to make computerized reimbursements.
Earnipay’s revenues come from charging employees a charge for accessing part of their wage early. For withdrawals between ₦2,000($4) and ₦10,000 ($20), Earnipay collects a ₦250 ($0.5) charge. For ₦10,000 to ₦50,000 ($100) withdrawals, the cost will increase to ₦500 ($1).
Since working in beta, Earnipay has served over 20 companies, outsourcing corporations and HR resolution suppliers in Nigeria. Some of its shoppers embody Eden Life and Thrive Agric, whose “thousands of employees” have used the app to access their wage over 1,000 occasions, mentioned the corporate.
“We are super bullish on the product that we were building. Our goal is financial wellness for all and we want to build products in line with that. We’ve taken the first step, which is affordable access,” Onwuzulike mentioned.
“The second product that we’re building is financial education to provide people with financial literacy tools so they make better spending decisions. We will build products around that primarily just so that we’ll enable employers to make their employees happier, improve productivity, retain talent and solve the biggest problem in the workplace today that nobody is solving, which is employee money issues.”
Earnipay will use this seed funding to goal giant enterprises and shift its focus regionally. It would possibly face competitors from YC-backed South African startup FloatPays, which plans to increase throughout the continent.
That mentioned, the expertise of Earnipay’s buyers in backing an identical firms throughout rising markets will likely be pivotal to the Nigerian fintech’s progress. XYZ Capital is an investor in Refyne, a two-year-old Indian earned wage access platform that lately raised $82 million in Series B. The San Francisco-based enterprise capital agency additionally backs Mexico-based Minu alongside Village Global.
For Canaan, this appears to be its first funding in an earned wage access platform, judging from its portfolio. Earnipay presents a chance for the Connecticut-based fund to take part in a promising fintech class witnessing an increase in uptake across emerging markets.
“We’ve seen earned wage access grow rapidly in many markets and believe it’s a natural fit in Africa,” mentioned Brendan Dickinson, basic accomplice at Canaan. “Earnipay has quickly established itself with a product built specifically for the payroll behaviors of this region, and early employer uptake is very strong. Nonso has built one of the strongest teams that we’ve met on the entire continent, and we’re thrilled for the opportunity to partner with them.”