‘As workplaces rapidly change post-pandemic, the way people getting paid changes too’: wagely CEO

With stagnant incomes, rising living costs, and a lack of savings, workers are under daily pressure to stay afloat financially. The options for this segment are minimal when faced with an urgent need for cash. The result is a vicious cycle of repeated reliance on payday loans and other costly financial products, leading to financial stress among the workforce.

Indonesia-based wagely aims to address this problem. The two-year-old startup has developed an online platform that lets workers of its partner employers access (EWA) their earned wages in real-time. (EWA is an emerging employee benefit that provides workers on-demand access to wages they have earned but not yet been paid on)

The firm has just announced a US$8.3 million in pre-Series A round from some of the region’s top VCs, including lead investor East Ventures (Growth Fund).

A few hours before this announcement, e27 spoke to wagely Co-Founder and CEO Tobias Fischer.

Below is the edited version of the interview:

You said in a statement that wagely is scaling further in Bangladesh. What opportunities do you see there? How is this market different from Indonesia?

We see a massive opportunity for financial technology in Bangladesh. The South Asian country has characteristics and attractive fundamentals similar to Indonesia in terms of demographics, large total addressable market, limited access to credit, growing demand for tailored financial services, and the ability to expand products and segments.

Also Read: wagely bags US$5.6M to give Indonesia’s low-paid workers access to their earned wages

How many customers do you have in total? Can you share the names of some of your corporate customers?

wagely is working with some of the largest employers in Indonesia and Bangladesh. We serve more than 150 million workers across both markets.

In Indonesia, we have partnered with hundreds of businesses across industries, such as Adaro Energy, Medco Energi, British American Tobacco, Ranch Market, and Century Pharma, among several others.

The recent expansion to Bangladesh has garnered 50,000 workers across the largest apparel manufacturers in the region. In Bangladesh, which is home to the 7th largest labour force globally, we’ve partnered with leading companies, including SQ Group, Classic Composite, and Vision Garments.

Do you also see opportunities in other emerging markets in Asia, Africa and America?

The additional capital allows us to double down and accelerate our market-leading position across Indonesia and Bangladesh.

What are some definite trends you read in Southeast Asia’s EWA vertical? Do you see employees increasingly preferring EWA?

Our workplaces are changing rapidly, especially since COVID-19 struck. The way people are getting paid is changing too and at scale.

What I mean is that we are making a lot of adjusting in terms of work (where we work and how we work, etc.) but the only thing that has never been questioned is how we get paid. We believe employees shouldn’t have to wait until the end of the month to get paid.

What are the key benefits employers gain by partnering with wagely?

Lower- and middle-income workers live paycheque to paycheque and struggle with unexpected financial expenses between paycheques. This impacts businesses with higher turnover, lower productivity, and more employee loans. Offering employees immediate access to their wages boosts the workforce’s financial resilience and has a measurable and proven impact on employee retention and productivity.

How does wagely make money?

Incumbent financial institutions and payday lenders make money when people are stuck paying interest, overdraft, and late fees. wagely is different and makes money only by charging a flat membership fee.

The wagely membership fee is paid by employees only when they find value in our product and make progress with us. Why do we take this approach? Because we believe membership is the only business model that truly aligns wagely’s incentives with your employees’ financial wellbeing.

Also Read: Paywatch aims to scale its earned wage access biz across SEA with a US$5.25M funding

We are also the only regional player operating in two markets, has received ISO 27001 on information security, and is directly integrated with SAP.

Do you think as COVID-19 subsides and markets go back to normal, EWA will become irrelevant?

Even before the pandemic, there was substantial evidence that over 75 per cent of the Southeast Asia workers struggled to cover unexpected expenses between salary payments, causing significant financial stress costing businesses millions in lost productivity and higher turnover. Employers were left grappling with how to support their workers and the financial burden they faced.

The pandemic shone a light on this challenge and exacerbated the need for employers to step in.

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