Like so many other aspects of modern life, fintech innovations are revolutionising how payroll systems function and how flexible they can be.
Against that backdrop, earned wage access (EWA) has emerged as potentially a fundamental gamechanger for employers and for their workforces.
“Consumers worldwide today want and expect systems, and particularly financial services, to be digitised, flexible, super easy to use and responsive to their own specific needs,” explains Taras Boyko, a serial entrepreneur and fintech investor.
According to a recent Zion Market Research study, the global earned wage access software market, valued at $22.50 billion in 2022, is predicted to grow by over $4 billion by 2030. This growth reflects the increasing demand for digitised, flexible, and user-friendly financial services.
The appeal of EWA is evident in the willingness of 79% of workers globally to switch to companies offering such services. Gen Z to Gen X employees in the US, for example, feel they should have access to wages they’ve earned at the end of every work day. Boyko notes, “In essence, for service providers in the space, it’s about meeting people where they are and delivering tools that make a positive difference.”
For employees, the option of quickly accessing wages earlier than scheduled, and in a hassle-free way, represents a significant perk, particularly given the cost of living pressures and lack of emergency savings in evidence among working age populations worldwide. Indeed, for anyone struggling to make ends meet or to manage their debt situations, the advantages of EWA options are obvious and can have a huge impact on both financial and broader personal wellbeing.
Upgrading payrolls
Digitalisation is an ongoing megatrend that cuts across industries and payroll functions have been upgraded significantly as part of that process. Cloud-based computing systems, plus the latest superfast money transfer and payment capabilities and, increasingly, AI innovations, are all helping to enhance the speed, security and seamlessness of payroll processes. Tasks that might, until recently, have taken several days for payroll professionals to execute can now be done almost instantaneously, regardless of how dispersed or remote an organisation’s workforce might be.
Meanwhile, digital platforms designed specifically to meet the needs of organisations with lots of employees can give HR professionals instant access to all manner of pertinent and potentially powerful data. That data is not just made accessible but rendered more visually engaging, coherent and easier to work with. Increasingly, payroll-related details and insights that might otherwise have gone unnoticed are being identified and deployed strategically to inform better decision-making within businesses, all the way up to boardroom level.
Global adoption and impact
Evidence of growing demand for and satisfaction with EWA options among employees is compelling. Employers also see tangible benefits, including improved staff retention, wellbeing, and productivity. Gig economy workers, who are used to digital flexibility and managing their money via apps, are particularly attuned to the advantages of EWA solutions.
With these positive dynamics in place, the EWA market remains relatively untapped, presenting significant growth opportunities. Fintech firms are becoming prominent providers of on-demand wage payout services. For fintech innovators and investors, the incentives are clear, with demand for EWA poised for rapid global growth.
Although EWA was pioneered in the US, the greatest potential for the service may lie in markets with slower pay cycles and more complex labour laws, according to a report from Harvard University. Most European companies pay monthly due to labour laws not mandating higher pay frequency. To address this gap, significant providers have emerged in the last five years. For example, Wagestream, founded in 2018 in the UK, serves over 1 million workers across 300 employers globally. Payflow, set up in Spain in 2020, has over 100,000 users and 175 employers on their platform, with plans to expand to the B2C model.
In Asia and Latin America, many companies founded recently are experiencing rapid growth in valuation, corporate clients, and end users. Refyne in India, founded in 2020, raised $82 million in a Series B round in January 2022. Wagely, also founded in 2020 in Indonesia, created the EWA category in Indonesia and has expanded to Bangladesh. Their competitor, GajiGesa, works with more than 120 companies and claims that over 80% of their employees have stopped using informal lenders due to EWA. Advance in the Philippines raised $16 million in pre-Series A funding and expanded to Vietnam. In Latin America, Minu, a Mexico-based employee wellness company, has over 300 enterprise customers and reported 5x revenue growth between 2021 and 2022.
What lies ahead…
People worldwide are feeling the squeeze financially, and they want the flexibility to access money they’ve earned on their own terms. According to the on-demand pay company Clair, some 48% of US consumers say their incomes did not cover their everyday outgoings in 2023, and 83% would like to be paid daily or weekly. For tech innovators and their investors, therefore, there are huge incentives to deliver tools that make those financial options more readily accessible.
The challenge for the tech firms behind the latest EWA solutions will be, as ever, to deliver the best products but also, crucially, to earn and retain the trust of consumers and employers. Penetration levels in the market are currently low but the benefits are becoming increasingly obvious. So the ingredients are in place for strong growth within the sector.
Taras Boyko on EWA’s Fintech Wave
“By leveraging advanced fintech solutions, EWA is setting a new standard for financial accessibility and control,” says Taras Boyko. “The ability to access earned wages instantly mitigates financial stress and fosters a more resilient workforce. As the fintech landscape evolves, we can anticipate even more sophisticated EWA solutions that integrate AI and machine learning to optimise financial health for employees.”
As EWA further integrates into global payroll systems, it promises to transform the conventional pay cycle. Although the application and impact of EWA vary across different regions, its core value remains consistent: empowering employees with greater financial control. This empowerment leads to a more engaged, productive, and financially secure workforce.
The global adoption of EWA marks a significant transition towards financial services that prioritise employee needs. Boyko stresses: “Fintech solutions are most effective when they address the inherent dynamics of digitally-savvy, mobile phone-using populations, a trend now evident across the globe. EWA fits perfectly into this framework, providing benefits for both employees and employers.”