Earnipay raises $4 million to help workers in Nigeria access their salaries faster – Referus

To deservea fintech offering flexible and on-demand salary access to income earners has raised $4 million in seed funding led by a venture capital startup Canaan

Participating investors include XYZ Ventures, Village Global, Musha Ventures, Voltron Capital, Ventures Platform and Paystack CEO Shola Akinlade.

Earnipay, which has been in beta since September 2021 and only launched last month, plans to offer its on-demand payroll solution to 200,000 employees by the end of 2022.

Most of the African workforce is paid monthly but live salary to salary† youLike more developed countries like the US, where weekly or biweekly salaries can handle this lifestyle, low monthly wages – which is the norm in Africa – not† So what eventually happens is that income earners take salary advances or borrow money from payday lenders and loan sharks to offset their daily expenses and emergencies, in the end get into a debt cycle.

A few individual companies have attempted to address this issue internal and give employees access to their daily salaries while they work for it. Earnipay founder and CEO Nonso Onwuzulike tried this while running Reaval, a Ghana-based recycling company he started on the side in 2019.

His employees were informal sector garbage collectors, with a history of daily or weekly paymentsOn the other handOnwuzulike, who had spent most of his life in the formal sector – even holding the position of Country Manager for Bolt Ghana during this period – was used to to pay and receive monthly salaries, which caused problems for his recycling company.

“There were ill effects of that long wait between pay cycles, especially for these people who didn’t earn much,” said the founder, describing the salary situation at his former company. “They weren’t productive in the end because they… money issues and it led to exhaustion and retention issues for me because these were guys who are used to get paid right away, but I paid them once a month, and they didn’t feel like it.”

Onwuzulike developed a solution to make their payment flexible: weekly or biweeklyHe then thought he could scale it up to formal sector companies and there was data to support this decision. According to a survey of a few income earners who worked in the formal sector, about 80% of them preferred flexible access to their salary over the salary advance option in the vernacular developed by banks. This is how Earnipay was born, with Busayo Oyetunjic and Joshua Ajayic join as COO and CTO respectively.

Earnipay builds something is known worldwide as a wage earner access platform† But Onwuzulike describes the company as a financial wellness solution for employees, whose first product is on-demand payroll access.

The platform integrates with companies’ existing payroll or HRM systems to offer its services to employees, who can then track and record their accrued paychecks through the app.

Employee Salaries are pro rata daily and companies can set limits on the percentage of salaries employees can take each month. For example, if an employee earns ₦300,000 per month, he could get 10,000 per day (for 30 days) or 15,000 (if the employer sets the system to count only work days; 20 in this case).

The founder said Earnipay makes these payments on behalf of the company, especially those whose cash flow may be to be influenced they must finance the wages earned themselves. At the end of each month, these companies reimburse Earnipay. But for others who can afford it, Earnipay sets up a reconciliation account on top of employees’ payroll accounts with scheduled automatic repayments.

Earnipay’s revenue comes from charging employees a fee for early access to a portion of their pay† In front of Withdrawals between 2,000 ($4) and ₦10,000 ($20), Earnipay will receive a fee of 250 ($0.5). For withdrawals from ₦10,000 to 50,000 ($100), the fee is increased to 500 ($1)

To deserve

Nonso Onwuzulike (Founder and CEO, Earnipay)

Since operating in beta, Earnipay has served more than 20 companies, outsourcing companies and HR solution providers in Nigeria. Some of its clients include Eden Life and Thrive Agric, whose “thousands of employees” have used the app more than 1,000 times to access their paychecks, the company said.

“We are super optimistic about the product we were building. Our goal is financial well-being for everyone and we want to build products that match that. We have taken the first step, which is affordable access,” said Onwuzulike, highlighting other products his company has in the pipeline.

“The second product we are building is financial education to provide people with financial literacy tools so they can make better decisions about their spending. We are going to build products around that in the first place just now so that we enable employers to make their employees happier, improve productivity, preserve talent and solve the biggest problem in today’s workplace that nobody solves, which is employee money problems.”

Earnipay will use this seed funding to target large companies and shift the focus regionally. It could face competition from YC-backed South African startup FloatPays, which plans to expand across the continent.

That said, Earnipay’s investors’ experience backing identical companies in emerging markets will be crucial to the growth of Nigeria’s fintech. XYZ Capital is an investor in Refyne, a two-year-old Indian wage earner access platform that recently raised $82 million in Series B† The San Francisco-based venture capital firm supports Mexico-based Minu in addition to Village Global.

For Canaan, this appears to be the first investment in a wages access platform, judging by its portfolio† Earnipay offers the Connecticut-based fund the opportunity to participate in a promising fintech category that is witnessing an increase in adoption in emerging markets.

“We’ve seen access to earned wages grow fast in many markets and believe it is a natural fit in Africa,” said Brendan Dickinson, general partner at Canaan, in a statement. “Earning has fast settled with a product built specifically for the wage behavior of this region, and early employer take-up is very strong. Nonso has built one of the strongest teams we have met across the continent, and we are delighted to have the opportunity to work with them