EWA (Earned Wage Access) Model to Radically Change SEA’s Payday Culture

September 23, 20213:27 pm4567 views
EWA (Earned Wage Access) Model to Radically Change SEA’s Payday Culture
Gerd Altmann via Pixabay

EWA platforms are making their way into Southeast Asia (SEA). EWA model is predicted to solve employee’s long financial management problems by offering salary on demand. EWA platforms allow employees to withdraw their pay cheque without having to wait until payday. Generally, EWA platforms would front the money and then be reimbursed later by employers by the end of the pay cycle. Some platforms charge employers with a subscription fee, while others operate on the model where employees will be charged a small amount for every transaction.

Peter Briffett, the chief executive of EWA platform Wagestream, told Sifted in an interview that the pandemic has made people value the EWA model more. Across Europe and the US, organizations have started providing their employees with an easy access wage. Studies have shown that granting employees early access to their wages could stop the vicious debt cycle which could lead to a long-lasting negative impact on individual financial well-being, and in turn, could risk a higher turnover rate for business. 

Catching up to Europe and the US

Having proven its positive impacts in the West, EWA startups have started to emerge in the SEA region since last year. Pitchbook’s survey reported Western VCs bullish investments for EWA startups in 2021. SEA is anticipated to follow suit this trend in a couple of years.

Source: Pitchbook

Mitchell Goh, Co-Founder and CEO of Singapore’s EWA platform GetPaid, told HRTech, “It is my opinion that due to the big disparity between growth in standard of living vs growth in salaries, Singaporeans are in jeopardy of becoming financially unstable. As such Singaporeans are in need of financial solutions that are sustainable and non-predatory in nature.”

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The same concern has also become the reason for Vidit Agrawal and Matyrna Malinowska to co-found GajiGesa, an Indonesian fintech startup that just launched their new app for micro-SMEs. Initiated last year after securing a $2.5 million seed round led by Defy.VC and Quest Ventures, GajiGesa recently announced OCBC NISP Ventura, the venture capital arm of one of Indonesia’s largest banks, as its new backer. Based on GajiGesa’s survey, more than 75% of workers of companies who are users of EWA platforms have stopped using informal lenders for short-term needs.

Malaysia’s first EWA platform, HariGaji, was awarded the MAGIC-SIM grant which later helped them establish the startup and further improve the locals’ financial literacy. Co-founder Annamalai told Malaysia Kini that she first began conceptualizing HariGaji after noticing that construction workers struggle to meet financial emergencies and essentially living paycheck to paycheck. Just this year, HariGaji came out the winner in the VynnHack 2021 competition and was accepted into the MAGIC GAP programme cohort 5. 

SEA has picked up the transition to technology for its financial solution. By bringing up employee’s financial stability as its main concern, EWA startups have acquired leverage over other emerging fintech startups.

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