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Earnipay, a fintech that gives versatile and on-demand wage entry to income-earners, has raised $4 million in seed financing led by early-stage enterprise capital agency Canaan.
Taking part traders embrace XYZ Ventures, Village World, Musha Ventures, Voltron Capital, Ventures Platform and Paystack CEO Shola Akinlade.
Earnipay, which has been in beta since September 2021 and solely launched final month, plans to supply its on-demand wage resolution to 200,000 staff by the tip of 2022.
Most of Africa’s workforce is paid month-to-month however reside paycheck to paycheck. Unlike extra developed nations just like the U.S., the place weekly or bi-weekly salaries can handle this life-style, low month-to-month wages — which is the norm in Africa — can’t. So what finally ends up taking place is that income-earners takes wage advances or borrow cash from payday lenders and mortgage sharks to offset their day by day bills and emergencies, ultimately falling right into a debt cycle.
A couple of particular person companies have sought to deal with this downside internally and permit staff to entry their day by day salaries as they work for it. Earnipay founder and CEO Nonso Onwuzulike tried this whereas operating Reaval, a Ghana-based recycling enterprise he began on the facet in 2019.
His staff had been waste collectors from the casual sector, with a historical past of gathering day by day or weekly funds. Alternatively, Onwuzulike, who had labored most of his life within the formal sector — even holding the place of nation supervisor of Bolt Ghana throughout this era — was accustomed to paying and receiving month-to-month salaries, which induced issues for his recycling enterprise.
“There have been opposed results of that lengthy wait time between pay cycles, particularly for these individuals who didn’t earn a whole lot of earnings,” stated the founder describing the wage scenario at his former firm. “They ended up not being productive as a result of they’d cash points and it led to attrition and retention issues for me as a result of these had been guys who are used to getting paid instantly, however I used to be paying them as soon as a month, and it didn’t make sense to them.”
Onwuzulike developed an answer to make their fee versatile: weekly or bi-weekly. He then figured he might scale it to firms within the formal sector and tright here was information to again this choice. Per a survey carried out amongst a number of income-earners who labored within the formal sector, about 80% of them most well-liked having versatile entry to their salaries moderately than the wage advance choice popularly pioneered by banks. That’s how Earnipay got here to be, with Busayo Oyetunji and Joshua Ajayi becoming a member of as COO and CTO, respectively.
Earnipay is constructing what is understood globally as an earned wage entry platform. However Onwuzulike describes the corporate as a monetary wellness resolution for workers, of which its first product is on-demand wage entry.
The platform integrates with firms’ present payroll or HRM methods to supply its providers to staff, who can then monitor and withdraw their accrued salaries by way of the app.
Staff’ salaries are prorated day by day and corporations can set limits for the proportion of salaries staff can withdraw every month. For example, if an worker earns ₦300,000 month-to-month, they’ll get ₦10,000 day by day (for 30 days) or ₦15,000 (if the employer units the system to depend solely workdays; 20 on this case).
The founder stated that Earnipay makes these funds on behalf of the corporate, particularly these whose money circulate might be affected ought to they finance the earned wage funds themselves. On the finish of every month, these firms reimburse Earnipay. However for others who can afford to, Earnipay units up a reconciliation account on high of staff’ wage accounts with scheduled computerized reimbursements.
Earnipay’s revenues come from charging staff a payment for accessing part of their wage early. For withdrawals between ₦2,000($4) and ₦10,000 ($20), Earnipay collects a ₦250 ($0.5) payment. For ₦10,000 to ₦50,000 ($100) withdrawals, the cost will increase to ₦500 ($1).
Nonso Onwuzulike (Founder and CEO, Earnipay)
Since working in beta, Earnipay has served over 20 companies, outsourcing companies and HR resolution suppliers in Nigeria. A few of its purchasers embrace Eden Life and Thrive Agric, whose “hundreds of staff” have used the app to entry their wage over 1,000 occasions, stated the corporate.
“We’re tremendous bullish on the product that we had been constructing. Our purpose is monetary wellness for all and we need to construct merchandise consistent with that. We’ve taken step one, which is reasonably priced entry,” stated Onwuzulike, highlighting different merchandise his firm has within the pipeline.
“The second product that we’re constructing is monetary training to offer folks with monetary literacy instruments so that they make higher spending choices. We are going to construct merchandise round that primarily simply in order that we’ll allow employers to make their staff happier, enhance productiveness, retain expertise and resolve the largest downside within the office immediately that no one is fixing, which is worker cash points.”
Earnipay will use this seed funding to focus on giant enterprises and shift its focus regionally. It’d face competitors from YC-backed South African startup FloatPays, which plans to broaden throughout the continent.
That stated, the expertise of Earnipay’s traders in backing equivalent firms throughout rising markets shall be pivotal to the Nigerian fintech’s development. XYZ Capital is an investor in Refyne, a two-year-old Indian earned wage entry platform that just lately raised $82 million in Collection B. The San Francisco-based enterprise capital agency additionally backs Mexico-based Minu alongside Village World.
For Canaan, this appears to be its first funding in an earned wage entry platform, judging from its portfolio. Earnipay presents a possibility for the Connecticut-based fund to take part in a promising fintech class witnessing a rise in uptake throughout rising markets.
“We’ve seen earned wage entry develop quickly in lots of markets and consider it’s a pure slot in Africa,” stated Brendan Dickinson, normal associate at Canaan, in an announcement. “Earnipay has rapidly established itself with a product constructed particularly for the payroll behaviors of this area, and early employer uptake could be very sturdy. Nonso has constructed one of many strongest groups that we’ve met on all the continent, and we’re thrilled for the chance to associate with them.”
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