EWA firms straight outta tech winter

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Hello reader,

There are few things more frustrating than having your salary paid late.

Luckily this isn’t a problem at my current employer, but it was a regular occurrence at jobs I’ve held in the past.

The problem was largely, in my opinion, due to many Vietnamese businesses being run in an analog manner. For the accountants I worked with to do seemingly anything, they’d have to sort through reams of paper, physically go to banks, and who knows what else.

So it was never that surprising when payment was late.

Maybe if my employers had worked with earned-wage access (EWA) firms, these things wouldn’t have been problems. Today’s featured story dives into how these companies are thriving amid the tech winter and pushing for profitability.

Today we look at:

• EWA startups tapping debt financing in profit push
• South Korea’s plan to compensate merchants hit by Qoo10 payment delays
• Other newsy highlights such as funding for Hive Health, a Singapore-based digital health insurance firm, and WeRide eyeing an IPO in the US.

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The wages of debt financing is profit?

Image credit: Timmy Loen

Despite the harsh bite of the tech winter, Southeast Asia’s earned-wage access (EWA) firms are not only surviving, but thriving.

Both Malaysia-based EWA provider Paywatch and its rival Wagely closed sizable funding rounds in recent months, with credit financing being the common ingredient.

• Business model: EWA companies aim to disrupt the payroll system by providing workers early access to their salaries. Credit facilities are needed to offer this product at scale, according to Alex Kim, co-founder and president of Paywatch. Most EWA firms generate revenue from fees paid by either employers or employees so that the latter can access their wages early. Doing this requires a large pool of capital.
• Profit in sight: Both Wagely and Paywatch are hoping to reach profitability next year. Wagely co-founder and CEO Kevin Hausburg says his firm is aiming to reach net profitability in the first quarter, which would mean serving about 1 million employees. Paywatch, meanwhile, wants to be profitable by Q3, so it needs 300,000 employees regularly using its services to achieve this goal.
• Diversification: EWA firms say their long-term goal is to help workers manage their finances better and some offer features such as bills payment, insurance, savings, and investments. Doing so allows them to create new income streams without charging higher fees to employees and employers.

Qoo10 in payment predicament

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