Nigerian financial technology startup Earnipay is now on a mission to establish a flexible and on-demand salary access to income-earners and employees in Africa, the startup has raised $4 million in seed financing led by early-stage venture capital firm Canaan.
The round was led by Canaan and with participation from XYZ Ventures, Village Global, Musha Ventures, Ventures Platform, Voltron Capital and Paystack CEO and serial investor Shola Akinlade.
Targeting employees across Africa, Earnipay officially launched its operations in January 2022, having been in budding stage and beta testing since September 2021.
On-demand salary access is a new development in tech with a huge opportunity in Africa. over 70% of Africa’s workforce (500 million people) paid every 30 days and are living paycheck to paycheck. The 30-days payment cycle has led to 40% of the workforce living in an unending debt cycle as they struggle to match their income to their daily expenses, emergencies and opportunities.
African businesses struggle to provide scalable solutions for employees to access their daily salaries as they work for it due to legacy payroll process, lack of available cash flow and internal salary advance that remains a tedious and manual affair.
What you should know about Earnipay
Earnipay was founded by Nonso Onwuzulike, a former country manager of Bolt Ghana before it officially launched early 2022. It was established to improve employees’ financial well-being, Earnipay combines technology with experience to offer employees the opportunity to access their earned salaries into their accounts flexibly, in real-time and interest-free.
Earnipay partners with businesses, companies and employers and seamlessly integrates with their payroll systems to offer its services to employees, who can then track and withdraw their accrued salaries via the Earnipay app. Of-course businesses and employers can set limits and track withdrawals on the app
Since operating in beta, Earnipay has served over 20 businesses, outsourcing firms and HR solution providers in Nigeria, including Eden Life and Thrive Agric, whose employees have used the app to access their salary over 1,000 times, indicating a strong demand for the solution.
What they are saying
Speaking on the funding round and the recent launch of Earnipay, CEO Nonso Onwuzulike, says,
“Financial worries are the leading cause of distractions in the workplace. The monthly pay cycle means employees are often unable to afford daily expenses, cover emergencies or take advantage of immediate financial opportunities.
As a result, they become exposed to predatory payday loans and get stuck in unending debt cycles with unrealistic payback periods and expensive interest rates”
Brendan Dickinson, general partner at Canaan, in a statement.
“Earnipay has quickly established itself with a product built specifically for the payroll behaviors of this region, and early employer uptake is very strong. Nonso has built one of the strongest teams that we’ve met on the entire continent, and we’re thrilled for the opportunity to partner with them.”
Earnipay exists to address this problem and offer an ethical alternative to instant salary access while helping employers improve employee engagement and retention at zero cost to their business. The future of salary is on-demand, and we’re excited to be pioneering this amazing solution in Africa.
I’m delighted to be collaborating with a group of highly respected investors who understand the need for a platform such as Earnipay to drive better access to salaries, and, importantly, to improve the financial well-being of income-earners in Africa.”
How Earnipay works
Most companies in Nigeria apportion employees’ salaries on a daily basis and companies can set limits for the percentage of salaries employees can withdraw each month. For instance, if an employee earns ₦300,000 monthly, they can get ₦10,000 daily (for 30 days) or ₦15,000 (if the employer sets the system to count only workdays; 20 in this case).
According to Nonso, Earnipay makes these payments on behalf of the companies, especially those whose cash flow may be affected should they finance the earned wage payments themselves. At the end of each month, these companies reimburse Earnipay. But for others who can afford to, Earnipay sets up a reconciliation account on top of employees’ salary accounts with scheduled automatic reimbursements.
The Fintech startup’s revenues come from charging these employees a fee for accessing a part of their salary early. For withdrawals between ₦2,000($4) and ₦10,000 ($20), Earnipay collects a ₦250 ($0.5) fee. For ₦10,000 to ₦50,000 ($100) withdrawals, the charge increases to ₦500 ($1).
What’s next for Earnipay?
With the Seed funding, Earnipay plans to accelerate the development of its technology platform and build more products to serve larger enterprise employers. By doing so, Earnipay will provide employees with the tools they need to make better financial decisions and improve their quality of life. The company plans to offer its on-demand salary solution to 200,000 employees by the end of 2022.
How Technology has aided businesses
In short, if your company gets onboard the Earnipay platform, you might not have to wait 30 days or month ending before you can access your salary.
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