Earned wage access, a method by which workers in Southeast Asian nations can receive advances on their salaries without turning to higher-interest loans, helped Indonesian fintech company Wagely gain notoriety.
Now that the platform is being used by half a million people, the startup has grown its business into a larger "financial wellness" platform. In order to support this expansion, the company has raised $23 million.
The finding is particularly noteworthy since it highlights how poor countries have been hit even harder than developed markets in the present bear market for technology, as evidenced by the funding crash that Indonesian entrepreneurs have experienced in the last several years. According to a January report by Indonesia's Financial Services Authority, startup funding in the country fell by 87% in 2023 to $400 million from $3.3 billion in the previous year.
The pressure from the economy is not limited to startups; it is also felt by regular people.
Salaries across all sectors have not increased at the same rate as the substantial expansion in the consumption of goods and services. Employees are searching for ways to meet their demands in between fixed-payroll periods, including credit.
However, not everyone has access to credit.
Millions of workers have no credit history and are underbanked. These workers may occasionally be obliged to look for other employment, such as one that pays earnings more frequently than once a month, in order to make ends meet. Employers experience a greater attrition rate as a result. Likewise, workers who, in an emergency, are unable to obtain a loan from a bank or other financial institution frequently fall victim to loan sharks, who extort large interest rates and engage in other predatory behavior. It's hardly surprising that international financial giants such as JP Morgan have hailed earned wage access as a financial miracle because it benefits both firms and employees.
