Wagestream, which seeks to put an end to the “payday poverty cycle”, according to The Times, raised $5.9 mn from investors – among whom were both Bill Gates and Jeff Bezos.
The startup has created a mobile app which enables employees of participating businesses to gain access to funds from their salary packages for a flat fee of $2.30 (£1.75). The total sum is then taken from the employees’ salaries on pay day.
Wagestream has launched a pilot with 25 businesses, employing 20,000 people. Peter Briffett, the founder, said he hoped to “stop people from getting into cycles of debt and poverty”.
“By giving workers access to their earnings, they can stop making financially distressing decisions such as taking out a payday loan. There is an instant link between work and reward,” he further added. Its participants to date include gym chain David Llyod and hotelier Travelodge.
The news of the raise comes weeks after the collapse of Wonga, widely credited with being the UK’s biggest payday loan provider.
Wonga, founded in London in the Autumn of 2006, provided “short-term, high-cost credit” and had operations in the UK, Poland, Spain and South Africa.
Briffett elaborated on this further. He said: “As we mark the death of one of the payday loan giants, we’re pleased to finally present a viable solution to help give the UK’s workforce the financial freedom they deserve.”
“While the wider and long outdated issue of monthly pay cycles is in desperate need of modernisation, for far too long legal loan sharks have been exploiting the most disadvantaged consumers with crippling high-cost loans. By giving workers access to their earnings, they can prevent themselves from going into overdraft, credit card debt or the worst case, applying for a payday loan.” He concluded.