Earned wage access gains popularity in Asia

Written by Kapronasia || May 25 2023

Across Asia’s emerging markets, earned wage access (EWA) has been gaining traction rapidly in the past two years. In a nutshell, EWA platforms allow employees of a company to access a portion of their earned pay before payday. EWA is catching on fast in some of Southeast Asia’s largest emerging markets where per-capita GDP remains relatively low and significant portions of the population are either unbanked or underbanked.

While being paid by the month is standard in many parts of the world, and some would say it is optimal for budgeting, monthly pay was not always so common. Before payment by direct deposit or cheque was the standard, employees received cash payments more frequently – sometimes weekly.

Research by the Everest Group has found that younger workers in particular are eager to receive their wages on demand or at least more frequently than once a month. Indeed, the shift for more flexible payroll solutions has accelerated in tandem with the rise of hybrid and remote work. "As the war for talent rages on, businesses need to ensure they are giving their people what they need, and to offer parity across a global workforce,” Paul Bartlett, CEO of payroll solutions provider CloudPay, told HCA in a recent interview. Given that employees want more control over when and how they access their pay, “those who don't provide this will lose out on top talent.”

EWA business models vary widely, but in Southeast Asia it is common for startups to work with employers to offer workers the app as a HR service, rather than targeting workers directly.

These startups usually tap financing companies for the upfront capital that funds early withdrawal requests from workers. However, employers may themselves be willing to provide this capital.

EWA startups charge fees to either the workers or the employers, on a per transaction or membership basis. At the end of the cycle, the employer pays back the withdrawn sums – a model that bears some similarities to payroll financing. There may be limits set on how much workers can withdraw in advance.

Several notable EWA startups have sprung up in Southeast Asia in the past two years, though the amounts they have raised thus far modest by the standards of fintech fundraising. In November 2021, GajiGesa, a fintech company focused on services for Indonesian workers, raised US$6.6 million USD in pre-Series A funding. In late 2022, Malaysian EWA service provider Paywatch raised US$9 million in a Pre-Series A funding round led by returning investor Third Prime.

There also have been several notable EWA deals in Vietnam. In August 2022, Vietnam EWA provider Nano Technologies raised $6.4 million in an oversubscribed pre-Series A round led by Singapore-based venture capital company Openspace. In January, Vietnamese EWA startup GIMO raised US$4.6 million in a Series A funding round led by Southeast Asia-focused venture capital company TNB Aura. GIMO offers on-demand payroll services for blue-collar workers.