Australian startup Cheq banks $1.1m to launch pay-on-demand solution

Sydney-based fintech company Cheq announced that it has raised over A$1.7 million (US$1.1 million) to launch its pay-on-demand (POD) solution.

The total investment consists of A$1.4 million equity (US$918,000) and AU$350,000 (US$230,000) debt from investors including VFS Group and others.

Photo credit: Cheq

Founded in 2019, Cheq uses machine learning, AI, location data, and statistical analysis to offer personal financial management solutions and allow Australians to access cash of up to A$200 (US$130) per pay cycle.

The service does not charge additional fees and interest, but there is a fixed transaction fee of 5%, compared to the 52% to 1,000% annualized percentage rates charged by payday lenders on similar amounts, the startup said. The debts will be recouped from a user’s bank account once wages are received to ensure people can’t exceed their spending capacity or get trapped in debt.

According to a study cited by Cheq, 5.9 million Australians currently live pay to pay, admitting they couldn’t survive financially for more than a month if they suddenly lost their job or could no longer work.

Cheq said that POD services were only accessible via enterprise human resource management systems, excluding 70% of workers in small businesses and startups. Through its direct-to-consumer solution, the company aims to prevent users from turning to “predatory” payday lenders that charge high interest rates and fees.

“You can get food, TV shows, cleaning services, dog walking, and everything in between on demand. So why is it that we can’t yet access our own money – money we have already physically worked for – as soon as it’s needed?” said Tarek Ayoub, CEO and co-founder at Cheq.

The company claims that about 600 users have already downloaded the app within two days of its beta launch. It found that most funds were used for transport and groceries, though many users left the money untouched in their accounts.

Currency converted from Australian dollar: US$1 = A$1.52.