Free, Instant Access to Earned Wages Improves Employee Well-Being and Boosts Productivity

At a time of pandemic-induced financial and economic hardship, waiting to get paid once a month can be challenging in the face of emergencies, surprise medical bills and unexpected expenses.

The inability to access earned wages in difficult times can also increase the chances of employees resorting to payday loans at high interest rates, further worsening their dire financial situation.

In Spain, salary advance startup Payflow has been looking to solve this problem for workers by allowing them to access their earned wages “whenever they want, as many times as they want and receive [funds] instantly,” Co-founder Avinash Sukhwani told PYMNTS.

“Millions of Spaniards live from day to day, and they only get paid once a month. In an increasingly immediate world, this cannot be a reality,” Sukhwani said, adding that enabling workers to instantly access their earned wages several times a month eliminates financial stress which in turn leads to greater productivity for companies.

Compared to other firms in the pay-on-demand sector, Sukhwani said Payflow, which launched in 2020, sells its product to companies at a monthly fee with no direct charge to employees for the service.

“The Workers’ Statute recognizes access to earned wages as a right. It would not be good for workers to be charged for their rights,” he explained. “They [companies] are offering Payflow as a social benefit to their employees.”

Read more: Barcelona-Based Payflow Closes $9.1M Funding Round

And in industries like hospitality, for example, where companies face major challenges in both recruiting and retaining talent, being able to offer such a free-for-staff service that enhances employee financial well-being is extremely valuable.

“We have noticed that our clients [have been able to] hire 27% faster, reduce their turnover by 20% and increase their employees’ productivity by 10% since [using] Payflow. Happy employees make happy companies, and our product helps to increase employees’ satisfaction,” he said.

Reaching Millions of Employees

So far, the model has been gaining popularity among blue collar workers, which has the highest uptake among companies using the platforms.

“In just two years, Payflow has become the regional leader in the earned wage access sector with [more than] 100,000 users and [over] 175 clients including well-known brands such as Webhelp, Covirán, Aristocrazy and Grosso Napoletano,” Sukhwani said.

The company recently closed a $9.1 million Series A funding round that has increased its total funding to close to $14 million, and with a 0% churn rate and having never lost a client, Payflow’s point of differentiation is working in what is proving to be an increasingly competitive space, he noted.

Moving forward, the Spanish FinTech plans to evolve from a salary advance firm into a neobank, expanding from the current 100,000-plus users to reach millions of employees across Europe and Latin America.

“In order to achieve this objective, we would have to significantly grow the user base and launch features that allow employees to do more with their money,” he said, aware of the enormous challenges involved in an ambitious plan like building a digital bank.

“Many have tried and not succeeded because it is a very complex product to build from all stand points including financial, operational [and] regulatory,” he noted.

But following on from the success Payflow has experienced over the past two years, Sukhwani said the firm is not slowing down anytime soon and remains focused on its goals and objectives.

“In 2022 we want to double the workforce and launch two additional products. We have plans to continue our international expansion through Latin America and Southern Europe, [starting in Italy and Portugal],” he said.

Sign up here for daily updates on all of PYMNTS’ Europe, Middle East and Africa (EMEA) coverage.