Thank you Emeka for the insight. The misalignment of access to pay with timing of pay is our core focus @paymasta. We are looking deep into finance education, proper management where we create and offer more value to the African workforce.
My sense is that the problem this solves — the pain of waiting 30 days between paychecks — is a very real one. But I think there's a relatively low barrier to entry and many folks will ultimately play in the space.
The differentiation in my eyes lies in distribution and, as you mention, the transition to offer other things,, whether that's education/benefits or banking/lending.
I don't think there's an inherent reason why a company couldn't do both.
But I was trying to say that folks who start with EWA tend to evolve either into more of a benefits/wellness platform (where education is one of the offerings) or more of a loan provider.
The two can coexist, but there may be different incentives.
For this model, it's very reliant on employers unlike payday loans which depends on employees. I worry that there won't be enough big companies to make this a standalone business and the smaller ones have working capital reliant on receivables and thus don't have regular paycheck cycles.
Basically do they go full HR or go full Banking?
Integrating to HR systems seem easy but I think this is a solution that wins on distribution vs product. More partnerships with HR SaaS will help. I also think there can be some data play. With access to users payroll, you can advice on other aspects of an employee's spending.
What about "ethical" BNPL? Can something like Pipe work here? - pay for future salary and earn some interest on it. This may cannibalise their main business, but I guess you need this sort of mad thinking to exploit opportunity.
You highlight an interesting question: whether certain markets are deep enough to support a pure play EWA platform at scale.
Some markets (like SA) are deeper than others, but I definitely agree that, projecting out, it's hard to see pure-play EWA win out. A transition to be EWA+full banking/lending or EWA+full HR/benefits seems much more likely.
Interestingly, after I published I got a note that Brass (the Nigerian business bank) just rolled out or is in the process of rolling out a consumer offering, BrassMoney, that has an EWA product.
This further reinforces my thinking that a lot of different players across the continent will likely launch/explore EWA in the near term & I'll be watching how it plays out.
It's an interesting model that still seems generally under the radar for whatever reason — I've been meaning to write about it for a while though. But really appreciate the feedback. 🙌🏽
Thank you Emeka for the insight. The misalignment of access to pay with timing of pay is our core focus @paymasta. We are looking deep into finance education, proper management where we create and offer more value to the African workforce.
Thanks for the comment, Michael.
How has your experience been?
My sense is that the problem this solves — the pain of waiting 30 days between paychecks — is a very real one. But I think there's a relatively low barrier to entry and many folks will ultimately play in the space.
The differentiation in my eyes lies in distribution and, as you mention, the transition to offer other things,, whether that's education/benefits or banking/lending.
What about offering both (banking/lending and education/benefits) for the same EWA service in your opinion ?
I don't think there's an inherent reason why a company couldn't do both.
But I was trying to say that folks who start with EWA tend to evolve either into more of a benefits/wellness platform (where education is one of the offerings) or more of a loan provider.
The two can coexist, but there may be different incentives.
Awesome piece, Emeka!
For this model, it's very reliant on employers unlike payday loans which depends on employees. I worry that there won't be enough big companies to make this a standalone business and the smaller ones have working capital reliant on receivables and thus don't have regular paycheck cycles.
Basically do they go full HR or go full Banking?
Integrating to HR systems seem easy but I think this is a solution that wins on distribution vs product. More partnerships with HR SaaS will help. I also think there can be some data play. With access to users payroll, you can advice on other aspects of an employee's spending.
What about "ethical" BNPL? Can something like Pipe work here? - pay for future salary and earn some interest on it. This may cannibalise their main business, but I guess you need this sort of mad thinking to exploit opportunity.
Pardon my rant😅.
The rant is welcome, Kamso 🙂🙌🏽
You highlight an interesting question: whether certain markets are deep enough to support a pure play EWA platform at scale.
Some markets (like SA) are deeper than others, but I definitely agree that, projecting out, it's hard to see pure-play EWA win out. A transition to be EWA+full banking/lending or EWA+full HR/benefits seems much more likely.
Interestingly, after I published I got a note that Brass (the Nigerian business bank) just rolled out or is in the process of rolling out a consumer offering, BrassMoney, that has an EWA product.
This further reinforces my thinking that a lot of different players across the continent will likely launch/explore EWA in the near term & I'll be watching how it plays out.
Interesting to see how it al plays out.
Loved this one! Thank you for the write-up, Emeka!
Many thanks, Nate 🙏🏽
It's an interesting model that still seems generally under the radar for whatever reason — I've been meaning to write about it for a while though. But really appreciate the feedback. 🙌🏽