Fintech solution, Earnipay, is improving financial well-being for salaried employees by allowing employees flexible access to their accrued salaries on any day of the month.
In 2019, Onwuzulike started a waste cycle business in Ghana, he noticed employees were not happy about being paid at the end of the month. Because most of them were coming from the informal sector, the monthly payment cycle made them broke and unable to cater for their daily expenses. For this reason, after they receive their first salary at the end of the month, many of the workers quit the company in search of other jobs.
Onwuzulike then conducted a poll of 100 formal employees in his network to determine how frequently they ran out of money before payday and what their employers did to help them.
Onwuzulike’s original goal for Earnipay was to create a salary advance solution, similar to others that previously existed in Nigeria, some of which were backed by traditional banks. However, plans were revised after a 100-person poll revealed that 90% of paid staff would prefer to have flexible access to their earned salaries.
Individual employees are not eligible for Earnipay, thus businesses must sign up and onboard their personnel. Employees can take up to 50% of their daily accrued wage as earned at the moment of access from the Earnipay app at any point during the month. The withdrawal is funded by Earnipay.
For example, dipping into one’s pay on the ninth day of the month entitles them to half of what they’ve earned over the previous nine days. Their company deducts the amount removed from their compensation at the end of the month, uses it to reimburse Earnipay for initially funding the withdrawal, and then gives the employee the balance as their monthly salary.
Withdrawals have different degrees of transaction fees. Withdrawals between $5,000 and $10,000 are charged a cost of $500, while withdrawals between $10,000 and $50,000 are charged a price of $1,000.
“It works just like an ATM,” Oyetunji said.
When Earnipay was piloted three months ago, Onwuzulike assumed that the solution would be effective exclusively for low-wage workers and informal workers, but the app’s users’ income profiles vary, according to Onwuzulike. He remarked, “One of our customers earns a million naira each month.”
So far, 17 businesses have registered as active users on the app, with their employees using Earnipay over 400 times.
Shorter payment cycles have undeniable advantages. An employee may, for example, view their daily paycheck breakdown on the app, and unlike a loan or salary advance, which are borrowed monies, an Earnipay withdrawal is earned wages.
Even yet, some of the dangers that come with taking out a loan or taking out a salary advance may apply here as well. For example, an earner who is unable to manage their personal finances may wind up dipping into their paycheck before payday for the most frivolous reasons and may continue to struggle to restrict their spending even after getting their salary amount at month’s end.
“The primary issue here is, we’re not financially educated,” Oyetunji remarked in response to these concerns. If you’re not financially disciplined, Earnipay may not make a difference to your spending habits whether you get your money at the end of the month or access it [daily] while you work.”
Now, as Africa adjusts to the global reset imposed by the pandemic, financial well-being in all sectors of employment is more vital than ever. “We’re in the midst of a financial health crisis,” Oyetunji remarked. “People’s quality of life suffers as a result of their inability to meet their basic necessities.” How can we have on-demand spending but not on-demand access to our earned salaries?”
The Earnipay team began developing the platform in July, secured undisclosed pre-seed funding in August, and launched their Minimum Viable Product (MVP) in September.
“Our goal is to cooperate with companies to increase employee financial well-being,” Onwuzulike said of Earnipay’s ambitions for 2022. We provide financial decision-makers with tools to help them make better financial decisions and improve their quality of life. We give financial education to advise employees on the best methods for managing their finances, as well as other items to aid them.