In the era of rising inflation and high cost of living, many employees tend to have the urge to access their salaries even before the month ends in order to be able to solve one pressing problem or the other.
It is as a result of this condition that tech solutions like Earnipay have risen to enable income earners to get paid whenever they need their pay and to help them avoid being taken advantage by predatory lenders.
In this interview with Nairametrics, Nonso Onwuzulike, the Chief Executive Officer of Earnipay Limited and a former Country Manager of Bolt Ghana, outlined reasons on-demand salary solution is on the increase in Nigeria. He also talks about the importance of financial wellness to salary earners, and what the future holds for Fintech in Nigeria. Excerpts:
How would you assess the fintech space in Nigeria?
The Nigerian fintech space is amongst the most innovative globally. Innovators and entrepreneurs are introducing solutions daily to improve our financial landscape. We’ve seen significant investment into the space in the past few years. I believe fintech in Nigeria is still at its inception, with a bright future ahead.
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Why did you choose the on-demand salary solution segment? What are the attractions?
We believe in the future, everything will be on-demand. We’ve seen this in ride-hailing, food delivery and streaming services, and how we get paid is the next and most important.
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Life (work and expenses) happens daily – but most of us get paid every 30 days. This long wait between pay cycles creates a liquidity gap for employees. Many cannot match their income to their expenses, leading to poor financial health. This gap has led to predatory lenders taking advantage of income earners with expensive interest rates.
Our goal is to enable income earners to get paid whenever they need it the most and avoid borrowing to fund their daily lives. We see this as a unique opportunity to solve a significant problem and provide solutions for income earners to make better decisions about how they save, spend and invest by enabling them to get paid on-demand.
Several firms offer the same or similar services to the same market. What are you doing differently?
We are a financial wellness solutions provider, innovating to improve the employer/employee relationship for better business outcomes. We partner with employers to enable and provide on-demand pay to their employees by plugging into their existing payment systems.
We allow employers to introduce financial education and planning, automated savings and bill payments to improve the financial health of their employees as a workplace benefit, which improves employee productivity and drives better business outcomes.
How do you manage competition, especially with big banks operating within the same space?
We’re excited to lead the charge for on-demand salary in Nigeria. We’ve taken a different approach to today’s model. We partner with banks, payroll providers, employer cooperatives, and other financial institutions, offering our technology and resources to democratize on-demand access to salaries. We focus on providing the best platform and product for on-demand salary to thrive in Africa.
While running Reaval, a Ghana-based recycling business, your employees were collecting daily or weekly payments as wages. Do you think that can work in Nigeria?
We are optimistic that this can be adopted in Nigeria even though we admit it will require a cultural shift as people are used to the 30-day pay cycle.
We observed that many income-earners take salary advances or borrow money from loan sharks to offset their daily expenses and emergencies, eventually falling into a debt cycle. What solution would you prefer to tackle this?
We built Earnipay to provide a sustainable alternative for income earners to get paid whenever they want to avoid taking expensive predatory loans to cover their daily living expenses. Our goal is to enable them to prevent unending debt cycles and make better decisions on how they save, spend and invest. Why borrow when you can get paid on demand? Why wait till the end of the month when you can get paid and start saving today? Why miss out on that investment opportunity when you can access your salary now?
Early in the year, you raised $4 million in seed financing led by early-stage venture capital firm Canaan. What is the update on this, and who are the participating investors?
We are very excited to partner with Canaan, XYZ Ventures, Village Global, Voltron Capital, Ventures Platform and our esteemed angel investors on this journey to improve the financial health of income earners in Africa.
What inspired Earnipay?
Most African employees live paycheck to paycheck with 30-day pay cycles. This long wait time leads to undue financial stress and unending debt cycles. Employees would rather get paid more frequently to meet their financial obligations. We understand that most businesses cannot offer shorter payment cycles due to cash flow and the cost of running payroll multiple times. Studies show that employers offering shorter payment cycles have happier and more engaged employees, which leads to increased retention and productivity.
We built Earnipay to enable employers to provide on-demand salaries to their employees, a solution to their pressing financial needs, and a platform to improve their financial health.
What are some of the interesting trends you have noticed by the current users of Earnipay?
Typically, we spend or save August’s salary in September. Earnipay users can access a portion of their September salary as they earn and accrue daily to cover their expenses or save. Thereby providing them with needed cash flow for their needs and emergencies without needing to borrow or wait till the end of the month. Further, by opting to save earlier, they can get a higher yield on their salary.
Since Earnipay only allows them to access up to 50% of their accrued earnings, they receive the bulk of their salaries from their employers, which they direct towards planning for rent, school fees or asset acquisition. Since the introduction of Earnipay, they have exhibited better financial habits.
How would you describe the Nigerian wellness system for employees? What can be done better?
In our interactions with employers, we found that financial wellness, the most critical form of wellness, is not discussed and addressed in the workplace, leading to negative impacts on the business and employees. We’re happy to lead the charge and drive this engagement across companies. We think employers need to improve employee wellness by introducing solutions like Earnipay in the workplace.
Are you looking to expand into other African countries?
Yes. Our goal is to expand across African countries as Africa’s leading on-demand salary and financial wellness provider.
Do you have a plan for people who are self-employed but would like to enjoy this benefit?
Yes, our intention is for the whole income earner group, not just salaried employees but also self-employed, freelancers and businesses, and we’re building capacity to serve the wider audience.
What has your experience been like running a business in Nigeria in light of the current situation of things?
It’s been an exciting journey. We have a strong team that’s been the backbone of our success so far, and we’re confident that we’ll build a successful business in Nigeria.