In its latest episode, the Big5D Podcast features Simon Ellis, the Co-founder and CEO of SmartWage. We asked Simon detailed questions about his company, which fits broadly into the financial inclusion space.
SmartWage was founded in 2019 as an earned wage access platform for South African employers and workers. Essentially it allows workers to tap into wages they have already earned for a small fee, which is either paid by them or their employer.
Why is this important? Far too many South African workers run out of money before their next payday. This is most acute for those on a 30-day pay cycle.
This state of affairs impacts employers by contributing to absenteeism. Money for transport is a leading reason workers need early access to wages.
And this harms workers for many obvious reasons, not least of which is they are often forced to resort to usurious payday lending to get by, absent a more benign alternative like EWA.
Listen to the episode
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“We estimate we're saving employees about 300 Rand per month that they would have alternatively spent on payday lenders,” Simon told us.
One of many challenges Ellis faces is convincing employers to pay for the service, rather than allowing employees to bear the full cost, which, while much lower than payday lending, is a cost all the same.
Probably the biggest competitive threats SmartWage and other earned wage access players face is from the big third-party payroll providers like Sage, ADP, and others.
Ellis acknowledged this but is confident that it does not fit into their business model. He believes that if a payroll player were to enter the space, it would likely be through acquiring a company like SmartWage, or a competitor like Floatpays.
Ellis said SmartWage needs more capital to scale and is in the process of raising a debt fund so it can handle a growing volume of wage advances as it grows.
The company’s future involves penetrating deeper into the market and expanding its set of solutions by adding on features like insurance, savings products, and the like. International expansion is likely farther down the road.
Watch the full episode on YouTube