Categories: Business

42% of employees run out of cash before payday ― Earnipay

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3 years ago

Earnipay, a financial technology company that provides flexible and on-demand salary access to income-earners has revealed that 42 per cent of employees in Africa run out of cash before payday.

This according to the firm leads to Employers’ loss of up to 27 days man-hour per employee per year due to money-related stress.

Speaking at a media roundtable in Lagos on Wednesday, June 22, 2022, the founder and Chief Executive Officer Earnipay, Mr Nonso Onwuzulike, said that for employers to improve their teams’ productivity, eliminate financial stress that holds back even star employees from performing optimally, companies can leverage Earnipay’s services to take care of weekly or bi-weekly salaries that suit the lifestyle of some low-income earners.

According to him, 67per cent of employees want more financial well-being support from their employers

“Most of Africa’s workforce is paid monthly but lives paycheck to paycheck. Unlike more developed countries like the U.S., where weekly or bi-weekly salaries can take care of this lifestyle, low monthly wages.

“So what ends up happening is that income-earners take salary advances or borrow money from payday lenders and loan sharks to offset their daily expenses and emergencies, eventually falling into a debt cycle,” he stated.

While explaining that Earnipay does not provide salary advance, but funds that equate to 50 per cent of the days worked in a month, Onwuzulike noted that a few individual businesses have sought to tackle this problem internally and allow employees to access their daily salaries as they work for it.

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The company says it wants to improve employees’ financial well-being by partnering with employers and seamlessly integrating with their payroll systems to offer its services to employees, who can then track and withdraw their accrued salaries via the app on any day of the month.

“At the end of the month, the employer deducts from the employee’s salary the amount withdrawn, refunds Earnipay with it, then pays the employee the balance as their salary for that month,” Onwuzulike said.

Financial worries according to him,

are the leading cause of distractions in the workplace. The monthly pay cycle means employees are often unable to afford daily expenses, cover emergencies or take advantage of immediate financial opportunities.

“As a result, they become exposed to predatory payday loans and get stuck in unending debt cycles with unrealistic payback periods and expensive interest rates.

“Earnipay exists to address this problem and offer an ethical alternative to instant salary access while helping employers improve employee engagement and retention at zero cost to their business.

“The future of salary is on-demand, and we’re excited to be pioneering this amazing solution in Africa. I’m delighted to be collaborating with a group of highly respected investors who understand the need for a platform such as Earnipay to drive better access to salaries, and, importantly, to improve the financial well-being of income-earners in Africa, he stated.

Also speaking, other team members including Esther John, Sakes and the Business Development executive explained that Earnipay charges employees a small processing fee of NGN250 or NGN500 for this access. There is no payback and no interest charge because employees are accessing what they have worked for, it’s their money they said.

The funding round was led by Canaan, with participation from XYZ Ventures, Village Global, Musha Ventures, Ventures Platform, Voltron Capital and Paystack.

According to the company, Earnipay has received US$4million and with the seed funding, Earnipay will accelerate the development of its technology platform to serve large enterprise employers. By doing so, the tech company will provide employees with the tools they need to make better financial decisions and improve their quality of life.

The company plans to offer its on-demand salary solution to 200,000 employees by the end of 2022 and has already served over 40 businesses, outsourcing firms and HR solution providers in Nigeria.

Employers can sign up to Earnipay via the web platform to gain access to the employer dashboard and add their employees in a simple process.

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42% of employees run out of cash before payday ― Earnipay

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42% of employees run out of cash before payday ― Earnipay