Disrupting the paycheck in SEA: a billion-dollar market with social impact?

The payday revolution is catching on in Southeast Asia.

Earned-wage access (EWA) startups have sprung up across the region and they hope to replicate a business model that’s been proven in the US and Europe: giving workers instant access to their wages and thereby keeping them away from high-interest lenders, informally known as “loan sharks.”

Such services have grown more relevant in Southeast Asia as workers struggle to manage their cash flows amid a prolonged pandemic.

Workers washing squids for export in a seafood factory in Vietnam. / Photo credit: 123rf

“The timing is quite right,” says Vidit Agrawal, who with his wife, Martyna Malinowska, co-founded GajiGesa, an Indonesia-based EWA startup in October 2020.

“Governments in the region have also recognized loan sharks as a big problem, which spoils the lives of blue-collar workers and a lot of people in the lower salary bracket,” he adds.

But how exactly do these tech-driven startups help keep loan sharks at bay, and how is this trend unfolding differently in Southeast Asia than elsewhere?

Payday comes early

EWA allows workers to collect their salaries before their regular payday. EWA firms automate that process in exchange for a small withdrawal fee. In some cases, the employers absorb the cost of early wage payments.

When payday arrives, employers transfer their employees’ salaries to the EWA startup to settle the balance.

Image credit: Timmy Loen

This service could significantly improve livelihood, especially for those who live paycheck to paycheck – estimated to be about 125 million adults in the US, according to a June 2021 report by Pymnts and LendingClub.

Globally, investor interest in this space has also taken off lately.

Growing beyond EWA

Rising against loan sharks