Spiralling demand was behind the latest fundraise by South African fintech startup SmartWage, which companions with firms to provide workers instantaneous entry to their earned salaries and wages.
Co-founded by Simon Ellis, Alex Platt and Nick Platt in 2019, SmartWage launched operations in February. The startup permits firms to supply their workers with instantaneous entry to a share of their salaries and wages for work they’ve already finished.
The answer is free to employers, causes no disruption to present processes, protects an organization’s cash move and reduces administrative problem. Staff can talk immediately with SmartWage’s WhatsApp chatbot to securely request and obtain advances on their earned pay.
“This prevents the need for employees to resort to expensive payday loans, microloans or unscrupulous loan sharks when they have unexpected or emergency expenses, or simply need a safe, easy and debt-free way to make it to payday,” Platt instructed Disrupt Africa.
Easy however efficient, and instantly highly regarded. Since its official launch in February, SmartWage has had 100 per cent repeat enterprise and acquired good suggestions.
“We are now in a position where we have been approached by more employers than we can handle and so are trying to work out how to deal with this,” Platt mentioned.
A method of coping with it’s elevating funding, and SmartWage did that final month, elevating ZAR6 million (US$347,000) in a spherical led by Chris Lister-James from Johannesburg-based seed investor FiTech Ventures.
“We are experiencing significantly increasing month-on-month demand and are allocating a lot of the new funding to bolster our technological and customer service capabilities to ensure we keep pace,” mentioned Platt.
Why is the answer so fashionable? South Africa is affected by a private debt disaster, with virtually ZAR1.7 trillion (US$100 billion) of client debt and the typical South African spending roughly 15 cents on each Rand they earn servicing their debt.
“On top of this, payday lenders and predatory loan sharks exploit consumers when they are at their most vulnerable – charging exorbitant fees and dangerously high interest rates, fuelling debt spirals,” mentioned Platt.
“We are up to nine times cheaper than regulated payday lenders and comparatively far cheaper than loan sharks or mashonisas. We wanted to create and offer a much cheaper and safer alternative that measurably improves the financial health and security of our customers, all via providing businesses with a powerful way to reduce their administrative hassle and improve their productivity.”
The answer is out there solely in South Africa for now, However Platt mentioned SmartWage has massive ambitions to increase throughout the continent.
“However, we don’t plan to expand until we are 100 per cent happy with the product we build and the solution we deliver here in South Africa,” he mentioned.
“The nice thing about the model is that it is revenue-generating from day one, by charging a very small transaction fee for users to access their earned pay. We are very much at the early stage, but are growing quickly, given we are only essentially five months into the business.”
All of this regardless of the COVID-19 disaster, which Platt describes as “obviously a massive curveball coinciding with our launch”.
“Most companies were in crisis mode and less open to taking on board new offerings like SmartWage. However, usage by our existing customers remains encouraging and we are still growing our base every day,” he mentioned.
“We also truly believe that what we’re offering is exactly what businesses and their employees need at a time like this, to make sure that companies can focus on what’s important to keeping their business going while also offering their staff a service that helps them to manage their finances more comfortably, plan responsibly and incur unexpected or emergency costs without compromising themselves financially.”