Monthly wages don’t fit everyone’s needs, this startup lets M’sians get their pay on demand

While monthly salaries might work for some people, not everyone has the same lifestyle or financial commitments to budget their lives according to a month-by-month paycheck.

This struggle was exacerbated by the pandemic due to pay cuts, reductions in shifts, and late salary payments. However, not all employers had the ability to give out advances on employees’ salaries, even if they wanted.

That’s where earned wage access (EWA) solutions come in.

EWA essentially gives teams access to portions of their salaries that they’ve already earned. Think of it like early, instant, or on-demand pay.

A company providing such solutions in Malaysia is Payd, founded by Justin Kong and Darvesh Darwani, who share a joint goal of improving the financial well-being of low-wage income earners.

Joining hands

With a decade of experience in the fintech industry, Justin’s interest in improving financial well-being was initially sparked by his own personal experience of trying to manage his funds as a new graduate.

But the idea truly took form a few years later when he began to notice workers asking for RM50 to RM100 a few days before payday.

A globetrotter who’s worked in London and Singapore, Justin met his then-soon-to-be business partner Darvesh in Singapore circa November 2020.

Darvesh’s background is in sales, having spent 10 years across Asia and Europe building successful sales teams, before going back to school for his MBA.

The two quickly realised they wanted to solve similar issues, and thus teamed up and launched Payd in 2021.

Empowering employees

When thinking to improve financial well-being, some may start with education and improving financial literacy.

However, Payd has a different way of looking at it.

“It’s unfair to ask people to improve their financial literacy and well-being without tackling the bigger problem of financial stress,” the duo shared. “As we are starting to tackle this issue, we now see that employees are more open to learning about how they can improve their financial situation.”

According to Payd, 65% of employees admit to feeling stressed about their finances on a monthly basis.

The team also claimed that monthly salaries were not popularised until 50 years ago, and as such, most people haven’t been taught to budget or live their lives in accordance with a monthly paycheck.

“However, we still insist on paying them in a manner that doesn’t fit the individual’s needs,” they pointed out.

With that in mind, Payd’s solution focuses on improving employee well-being by first looking to reduce financial stress.

“Via EWA, employees who prefer to manage their finances on a bi-weekly or even weekly basis now get a chance to take over their own financial decisions,” the team said.  

Of course, financial literacy is also part of the equation for improving financial well-being. Thus, Payd is aiming to launch a financial literacy tool on its app alongside RinggitPlus.

“As part of our systematic approach, we will look to add further tools, such as budgeting and savings on the platform later into 2023,” they explained.

Catering to lower-wage income earners

Some might think that younger members of the workforce might be the ones who seek EWA, wanting to “cash out” early on their earnings.

While young users are certainly part of Payd’s target market, they shared that the trends they’ve seen show that EWA is used just as much by those with families and kids.

Furthermore, lower-wage income earners are also more likely to genuinely need EWA. From Payd’s data, it’s usually people within the B40 and the M40 across the service and manufacturing industries who need it most.  

However, there might be concerns about EWA fostering or encouraging impulsive spending. But Payd believes otherwise, sharing that the data they collected shows that the average individual withdraws just about 15% to 18% of their salary on a monthly basis rather than the 50% they are able to.

“And for the most part, they are doing so for things such as petrol and day-to-day groceries,” they added. “This shows that there is much more awareness than traditional wisdom would have us believe.”

Differentiating itself

Other than Payd, there are also other businesses in Malaysia providing EWA. This includes Paywatch and HariGaji.

But the founders believe that there are three main differentiators of Payd compared to its competitors in Malaysia.

“We are the only EWA platform in Malaysia that is fully Shariah compliant,” they claimed. “This is a key reason that we have been able to partner with local government entities to provide EWA to their employees.”

Currently though, according to HariGaji’s website, it’s also Shariah compliant and is certified by MDEC’s Islamic Digital Economy.

Other than that, Payd believes it offers fair pricing and is currently free for employers to use, which the team believes is important in helping them take the step towards adopting a new product such as EWA.

“We are also very deliberate about our pricing towards employees,” they shared. “Our fee has been set up to ascertain that everyone can afford us, but also to ensure that employees understand that there is a choice between taking money out today versus taking it out on payday.”

According to the team, Payd charges a flat fee of a few ringgit per transaction. This withdrawal fee is Payd’s primary source of revenue as it doesn’t charge employers or have any monthly commitments required from our users.

Funding the funds

Today, Payd is working with over 30 companies, enabling around 60,000 employees on-demand access to their earned wages.

Listed on its website, the partners and investors that Payd works with include recognisable names such as Starbucks, Tropicana Corporation Berhad, Endeavor, and more.

In April, Payd raised RM7.5 million in its seed funding round. According to the co-founders, the funds have gone towards helping Payd accelerate its growth to meet increasing demand from employers to roll out EWA.

“We’ve used the money to build our core functions, including tech, sales, product, marketing, and customer success, increasing the team from five people to almost 20,” they shared.

“As we continue to scale, we will be looking for more talented individuals to help us improve financial well-being across the country.”

While the company’s short-term goal is to continue to grow as a provider of EWA in Malaysia, the big picture for Payd is to become an inclusive mobile financial well-being tool for low-wage income earners in Malaysia.

“Our aim is to enable these individuals to improve their financial literacy, and access necessary products such as budgeting, savings, insurance, and investments,” they shared.

Featured Image Credit: Payd