Why We Invested: FloatPays
Employment is not equivalent to financial inclusion. Contractors, participants in the informal economy, and even formally employed workers often remain on unstable financial footing despite medium- to high-consistency in compensation.
An Absence of Affordable, Short-Term Liquidity Solutions
Principal barriers to improved financial wellbeing often include access to short-term liquidity. Most workers lacking a credit score and other required documentation are unable to access credit from traditional banks and MFIs. Few affordable and sustainable alternatives exist, and instead many workers turn to loan sharks and other payday lenders to smooth their rigid pay cycles.
Based on Proof of Impact’s recent studies in South Africa, 76 percent of surveyed workers run out of money before month’s end. Rather than resolving issues related to financial stability, the prevalence of predatory rates cause 40 percent of these individuals to spend more than 40 percent of their paychecks to pay off existing debt. Insufficient financial access also takes a severe toll on workers’ health and productivity.
Enter FloatPays with Early Wage Access
These challenges are not unique to South Africa, although Cape Town-based FloatPays has emerged as a leader in creating more comprehensive liquidity solutions to help workers not only recover from debt cycles, but also improve their financial wellbeing.
FloatPays has developed a suite of financial tools, with early wage access (EWA), also known as wage streaming, at its core. Workers have two options to access funds. Instant Money can be extracted via ATM for an extremely low transaction fee or via an EFT into their bank accounts, which takes a few days to clear. Customers can also choose Critical Service Vouchers specific to medical, airtime, and utilities that come at zero-fee to the end-user.
To ensure that workers not only are able to manage unforeseen expenses between pay cycles, but also build up their financial literacy, users can access complimentary planning, education, and budgeting tools. FloatPays is also the only company on the continent to pair EWA with a savings account.
By partnering with employers and payroll providers, FloatPays is able to serve an expansive customer base of workers. Floatpays enables employers to enhance their employee value proposition to attract and retain the strongest workforce. Partners can be onboarded in just a few minutes, use the platform free of cost, and customize their selection of product offerings to meet their workforce’s unique needs. Early wage access products have no impact on businesses’ cash flows and do not alter payroll distributions.
Results to date mirror the expertise and dedication of Founder and CEO Simon Ward and his excellent team. Simon brings a rich hands-on career of building and scaling tech companies globally, with multiple successful exits. He chose to build FloatPays as his next endeavor based on extensive studies that identified a lack of early wage access and complementary financial tools as the primary pain-point of low wage earners. FloatPays’ recent impact studies have demonstrated 88 percent of workers have improved their financial health, and withdrawal amounts as a percentage of workers’ total paychecks have remained low as users are better able to maintain steady financial profiles.
Since FloatPays’ inception, their mission has been to help workers build financial wellness, and FINCA Ventures is thrilled to partner with the team on this journey.