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Hello reader,
Like many folks from the UK and Ireland, my first proper job was in a call center.
To say it was nightmarish would be an understatement. Making upwards of 400 calls a day meant following a memorized script to the point I could hear it in my dreams. Not only that, but management relied solely on the fear of job loss as motivation.
What was good about that job, though, was I got paid fortnightly. Getting access to my hard-earned cash quickly was probably a major reason I stuck it out for as long as I did.
Helping employees get access to their earnings quickly is what earned-wage access (EWA) startups have built their businesses around, and I can see why they’ve scored some traction across Southeast Asia. But as today’s featured story dives into, turning that traction into profit is proving to be a challenge.
Today we look at:
- EWA firms grappling with uncertainty
- Paymongo possibly raising funding soon
- Other newsy highlights such as Ola Electric facing a payment dispute and valuations of world’s top tech firms dropping by US$2.7 trillion
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Earning a profit is hard for EWA firms
Image credit: Timmy Loen
Southeast Asia’s EWA sector has recently scored a big win with its first exit.
Digital credit platform Kredivo’s acquisition of EWA provider GajiGesa for US$12 million is definitely a milestone. Despite this, EWA startups in the region still face harsh conditions as they try to scale.
- Cost pressures: EWA firms let employees access part of their salary before payday, making money through transaction fees and employer partnerships. Many of these companies incur high costs as they onboard businesses, integrate their solutions with payroll systems, and disburse salaries. This makes hitting profit a major obstacle, even as they scale.
- Obstacle overflow: The region’s tough fundraising environment has also hit EWA startups, with securing equity and debt financing becoming increasingly challenging. This has made M&As like GajiGesa’s a more attractive option.
- Branching out: Some firms in the space are exploring diversified revenue streams, including offering lending products, integrating with existing fintech ecosystems, and cross-selling other financial services.
Read more: EWA startups at a crossroads as scaling gets brutal
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