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Launch HN: Payflow (YC S21) – Allow workers to access their wages instantly
86 points by asukhwani 4 days ago | hide | past | favorite | 92 comments
Hi HN, we are Benoît and Avi, co-founders at Payflow (https://www.payflow.es/). We’re making a better app for workers to instantly access their earned wages. We launched a year ago in Spain (where we’re based!). Anyone in Spain can try our product. Otherwise, here’s a demo video: https://www.youtube.com/watch?v=GSDlGhoFNyM.

75% of employees in Spain and Latam live paycheck to paycheck and many have no savings. They often run out of cash before payday, especially if they have an unexpected expense. This is an issue for employers too, because high employee turnover amongst low-income employees is costly. Most employee perks (e.g. health insurance, flexible benefits, snacks in the office), which are so familiar to HN, are usually reserved to white-collar workers in Latam. Said employee perks are too expensive for blue-collar employers, and more importantly are not what employees who are struggling with financial instability actually need.

Given the inequality (and wealth) of our societies, we could argue that low-wage workers ought to be making more in the first place, but in the meantime people are making what they make and often have an urgent need to access that money faster. For example, a few weeks ago, we received a call from an employee who was stuck at a gas station in the middle of nowhere. He was out of gas and out of money. We helped him activate his Payflow account so he was able to instantly stream a portion of his earned wages. This allowed him to pay for gas and to continue on the road.

Every week we receive emails from potential users (who are unable to use our app because their employer has not yet signed a contract with us) and they literally tell us “I need money”. We thought employees would use our app because it’s innovative, but they mostly use it because they really need the money. This came as a surprise to us. We knew there was a need, but we did not realise the need would be so pronounced.

We met 8 years ago at MIT and discovered a company called DailyPay that was offering on-demand pay in the USA. We thought this was really cool, but didn’t really see it working outside of the USA. 8 years down the line, we saw a couple of players pop up in Europe and realised there was an opportunity to take on-demand pay to other countries. The pandemic was the perfect time to start because demand for short-term credit spikes in a crisis. That’s when we decided to get back together in Spain and launch Payflow for Spain and Latam.

Our mobile app allows users to see and withdraw their accrued wages in real-time. Employees value our product because it’s free, private and instantaneous. It’s free because we charge employers, not workers. More on that below.

When the user makes a withdrawal, we issue a real-time payment to their bank account, so they receive the money within seconds. On the backend, we have an integration with the employer’s payroll software so we know how much should be available for them. This is the tricky part. We need to know how much they have earned and if they are still employed by their company. It is hard to gather this information: payroll systems are complex in large companies, most integrations are on-premise, the market is fragmented and it is hard to create plug and play solutions. We realised we could solve it when payroll providers started opening their APIs to third parties. We saw this as an opportunity to solve a longstanding problem using technology. In reality, things were (as usual) harder than expected because a lot of payroll software integrations still have to be done on-premise.

This is a hot market right now: there are 150+ startups worldwide working on it! The hype is recent, most of the 150+ are just getting started, less than 10 have raised $5M+ in funding. However, almost all of these startups charge employees a fee for each transaction. That makes them effectively a payday loan in disguise. By contrast, we sell our service as a true employee benefit, which the employer pays for. Our solution is completely free for employees. This is an important distinction!

Workers living from pay check to pay check have traditionally been vulnerable to exploitation, and the entire payday industry has a bad reputation because of this. We’re building on what we hope is a much better foundation by being free for the employee and selling the product to companies. Our product means that people are much less likely to go into overdraft at their bank or to take out a payday loan. Both of those solutions are extremely costly. We want to fight financial institutions who are taking money from people who don’t have any. Second, we are truly committed to financial inclusion: we have launched two more products, Learnflow (a financial education platform to allow employees to learn about how to manage their personal finances better) and Saveflow (a saving tool that allows people to set money aside because we believe that financial freedom starts with healthy saving habits). Third, numbers show that people use our main service Payflow for very small amounts ($50-70) so we are not reinventing a loan but instead helping employees cover unexpected expenses and get paid in a more flexible way. In fact, we even give employers an optional feature where they can set a cap on the % of salary that their employees can withdraw. Some employers really like this function because it ensures employees will have enough money left over at the end of the month to pay for their rent!

Building a product, as you all know, is hard! We have a long way to go, but we are passionate about what we’re building. We’d really appreciate any comments and feedback, we’d love to hear anything that can help make Payflow better. Thanks in advance!






I worked at a company that was working on this. I left because of ethical reasons.

>Workers living from pay check to pay check have traditionally been vulnerable to exploitation

And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes out 50% of his pay. He uses is for immediate needs and than has to live at 50% of his pay for the next 1.5 month.

How is his situation any better?

Also I can 100% guarantee you, most people working in this space are working on loans for those users. They don't plan to stay as just company benefit. But even if you will 100% never do that I just don't the see advertised benefit for the workers.

This is just something that sound nice when you don't think too much about it. That explains why the companies are eager to implement this benefit at their companies. At the end the workers will struggle just as much and the struggle will stay hidden from the eyes of the employers, because of the financial problems stigma.


Hey qnsi!

I am leading BizDev at Payflow, I joined due to ethical reasons & social impact. Happen to be that I am southamerican and pretty familiar with people living paycheck to paycheck.

The reason why they are better off is because we are the only alternative that is free for them: Credit cards, loans, etc are not zero-rate. Far from that a loanshark can charge up to 3000% for a short term loan in LATAM.

We are bringing employers into the game, to actually do something and pay so that their employees get the zero-rate that is so popular for high income workers through their cards or banks.

What reduces your purchasing power is financial expenses, not accessing your money earlier.

We won't solve every money problem, but at least we are solving some and reducing low income workers exposure to predatory finance.

Hope you appreciate my answer, it was 100% sincere. Fede :)


That doesn't really address the underlying issue that OP pointed out.

People that have infrequent issues where they need to juggle money around could use this. They could also simply save money, since the implication here is that they have enough money but not at the right time. This is a nice option for them to have, though. I would also expect people in this category to have access to non-exploitative methods of financing. If they don't have savings, they probably at least have assets for use as collateral in a loan to get the interest rate down.

For others, they have frequent issues where they have to juggle money around. Their problem is cash flow, not the timing. They're going to continue to fall behind on their bills. They get a $500 paycheck, and have $450 in bills. They need $250 to fix their car, so they take it out. When their paycheck comes, they get $250 and can't pay the other $200 in bills. The late fees on their $200 bill they can't pay are going to stack up to eat the $50/month they could have saved. They're still paying financial expenses, they're just in late fees instead of interest.


there's a third situation. suppose I spend roughly the same amount of money every month as I earn. on paper, this means that I should be treading water, at least. but my wages actually hit my bank account a week after the end of each pay period. in the worst case scenario, I won't see my first paycheck until about three weeks after my first day of work. at the very least, this cuts into my savings, but could leave me permanently in the hole as late fees stack up, even though my income matches my spending! a different version of this problem can occur in any month where paydays and bill due dates fall in the wrong sequence.

credit-worthy people can easily fix this issue with credit cards, which fix the paid-in-arrears issue, and also smooth out spiky intra-month cashflow. but I can see this product being very useful for people who can't get credit cards or don't feel responsible enough to use one.


>And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes out 50% of his pay. He uses is for immediate needs and than has to live at 50% of his pay for the next 1.5 month.

This is extremely paternalistic and shows how little you automatically think of someone who isn't paid a lot of money. You think that people who don't have money, their problem must be budgeting ("stop eating all that avocado toast!!"), so you need to slowly ration out their money "for their own good." Complete ideological BS.


We all need to be treated like children that need help and guidance to some extent at various points in our lives. This is part of being within a broader community and I'm happy to accept it.

right, and you're a great example - you need to be treated like a child and guided to learn to respect and not stereotype adults who are given less money than you by our economic system. thats what you mean, right?

I hope you’re joking.

Helping and guiding people in your community when they need it is no joke.

I have a cynical view of how this product is going to turn out. Instant, easy access to wages is going to form habits in users to live on a day-to-day basis instead of budgeting for a month. With no headroom they will be that much more desperate in an emergency and that's the time to attack them with loans. The end game is always loans. That's the only way to make money in finance.

Well, unless we abolish individual p2p moneylending, SOMEONE is going to loan them money.

Providing more competitive and safe and professional options can only help, it can't make an already-bad situation worse.

The only situation worse than having to take a payday loan is not being able to shop for a decent vendor who isn't trying to screw you.


> And the proposed solution doesn't fix that. Most of those people don't have a problem with unexpected expense once a year. They don't budget and are short on cash every month. So now imagine Bob needs money halfway through the month. He takes out 50% of his pay. He uses is for immediate needs and than has to live at 50% of his pay for the next 1.5 month.

I think the idea is that it helps people avoids predatory payday loans. If Bob needed 50% of his pay for an emergency, he could go to a payday loan and end up spending a whole paycheck or more just paying it back over time.

The solution is government regulation and societal safety nets, not this, but if one’s government doesn’t fix the problem, there’s not much you can do besides this.


I don't buy this criticism. Suppose we were instead paid our salary annually as a lump sum at the end of the year and we were fighting for biweekly pay days. The same argument could be made! What if people misuse the money! The delay helps them budget!

The two week (or so) delay between hours worked and money being deposited in your bank account is a free loan from you to your employer. That's wrong. People should be free to access their earned income as soon as they earn it.

I do agree that this sort of product can easily become a payday loan system with terrible rates, but streaming your wages as you make them sounds like a pure good.


We need universal basic income (UBI)! Period. I believe that in a country like US every working adult (18 - 64) should get a minimum of 5k a month for paying basic expenses. Furthermore, Payflow should be integrated with the government UBI program so that anyone can withdraw money against it similar to what is being done now. This will go a long way in solving the Payday problems/worker exploitation issues as mentioned above.

>I believe that in a country like US every working adult (18 - 64) should get a minimum of 5k a month for paying basic expenses

$5000? The median pre-tax income in the US is only $2854/month. https://www.ssa.gov/oact/cola/central.html


> $5000? The median pre-tax income in the US is only $2854/month. https://www.ssa.gov/oact/cola/central.html

Op is probably in NY or SF where that doesn't even make you middle class and people who make double that still don't feel rich. $2854 a month would be absolute poverty wages in many parts of the country.

Conversely my company has announced it's not going back to the office ever. I'm tempted to go back to Tennessee where I can live live a king on my California middle class income.


LOL yeah that "living wage" just keeps going up and up the more we're talking about it.

I don't even take home 5K/month and I'm a professional software dev. Granted the reason is I am maxing out every pre-tax savings plan I can (retirement, HSA, etc.) but the notion that a 22 year old couple should be getting 120k/yr for doing nothing is absurd.


Yeah, $5k a month for "basic expenses" is beyond ridiculous.

I don't think it is especially if you are living in one of metro regions/tech hubs i.e. SF Bay area, Seattle, NYC etc.

Grad student stipend checking in. $21k/year in a large metro area (although not quite on the level of SF/NYC expensive). Median household income in my city is ~$100k/year.

Yes this is "enough" but no, it is not enough (especially after having worked and lived for a few years in a medium/low cost of living city).

That being said, $5k/month for "basic expenses" is definitely ridiculous. NYC/SF COL is like 30% more expensive than where I'm living, not a full 2.8x more expensive for basic expenses.

Edit: Also worth noting that in this context the $5k/month is spendable, so in SF for example this translates to about $82k/year pre-tax income, which according to the 2019 census is well above the median individual income of ~$52k.


Those are places that force poor people out because not everyone can live there. What kind of logic makes you believe that every single individual should obtain the right to live there for free? There is a reason why those places are expensive, because a huge amount of people wants to live there.

Most people don't.

The number itself as it pertains to cost of living isn't ridiculous, but the implied policy proposal of "let's give everyone $5000 so people in high CoL areas can cover their basic expenses!" is ridiculous. The #1 cause of high CoL in those areas is because it's a desirable place to live and there are more people who want to live there than there are housing units, so people bid up the price. Giving everyone $5000 wouldn't make it suddenly affordable, because everyone would just increase their bids by $5000, causing the situation to be the same.

No I didn't mean blanket 5k to everyone. It could very well be dependent on the place you live. 1k - 5k might be an acceptable range. If you live in NYC you get more, rural Alabama may be not so much. But you get the idea.

Assuming that not everyone can be successful in life (in spite of having boatloads of IQ + work ethic) UBI might be one of the few ways left to reduce generational in-equality. Don't get me wrong - I am no fan of socialism/communism and I understand the problems that come with a collectivist mindset. But I am also practical. I certainly don't want to live in a dystopia where a select few "masters of the universe" type rule over vast swathe of humanity.


>It could very well be dependent on the place you live.

Then it would have to be funded with local taxes. Why should people with a median salary pay taxes so that someone can get a UBI that is higher than the median salary?

>Assuming that not everyone can be successful in life (in spite of having boatloads of IQ + work ethic) UBI might be one of the few ways left to reduce generational in-equality.

Or you could just get rid of money hoarding and land hoarding. Just think about it. The time people spend unemployed or underemployed is gone but the money isn't. Thus the value of the claim to labor (money) is greater than what the economy can support. The inevitable result is inequality just from a pure logical perspective. The conventional solution had been to just let the economy grow endlessly so that the economy becomes strong enough to support all the freeloaders. Alternatively you let inflation act as a soft default on that unsustainable claim to labor.

https://www.npr.org/sections/money/2019/08/27/754323652/the-...


You have to be very careful with ubi (which I'm a huge fan of btw.), it could cause hyperinflation, probably would at $5k a month, because we have a pretty severe housing shortage there's going to be a whole bunch of people with an extra $5k that they could spend on housing so average rent may rise significantly.

Instead of jumping to straight UBI we need to build an abundance of housing that is of good quality, affordable to build, is operated by the state and is available to everyone regardless of income on a cost plus model. Also given that rent is most people's single biggest expense we could take the pressure off the poor. This plan however is politically untenable as affordable housing is something that anyone who owes money on their home does not want


> Instead of jumping to straight UBI we need to build an abundance of housing that is of good quality, affordable to build, is operated by the state

since you're willing to take incremental steps, perhaps we could have the state stop preventing cheap housing from existing, first.

it's not even legal to rent out decent, clean, individual rooms in many places.


Well, I am in favor a negative income tax funded by taxes on regressive behavior.

It's a great problem to solve, and killing the payday loan industry is a good thing to do.

Out of curiosity, why is the app UI and feature set practically identical to Wagestream (I worked there last year, so i'm pretty familiar with it)?


Wow, you aren't kidding. Even the copy on the landing page is a Spanish translation of Wagestream's landing page.

At first I thought I was looking at a newly-launched Spanish brand of Wagestream (they have launched in other countries under different names, so it wouldn't be unexpected).

I know Payflow has a subtly different value proposition (not charging for withdrawals). And it's totally conceivable that this is the obvious UI for this feature set, but it's really hard to miss the glaring similarities.


Indeed! We really like the idea of making the employer pay for it. We think it makes it a better benefit if the employee doesn’t have to pay.

Oh, that's why the copy read so weird!

As a native Spanish speaker, the text read awkwardly. I chalked it up to regional differences (LatAm v. Spain) but this explains a lot..


Who fancies making Cashriver?

What exactly is the same? I just checked and they look different.

In addition to the app screenshots mentioned by a sibling, look at the marketing materials. Many of the headers are a translation of Wagestream's headers, and the branding is all focused around circles in much the same way (most obviously in the app screenshots, but they both re-use the image of the circular slider in multiple places on the page).

To top it off, Payflow is a (near) synonym for Wagestream.


Scroll down to the app screenshots on payflow.es and wagestream.com. The UI for withdrawing cash is pretty much identical.

Thanks, yes it looks like a 1:1 copy. Interestingly, the founders reply to other questions here but not to the copy accusation.

In fact, only just yesterday, someone asked me “how come Wagestream copied your UX/UI?” ;)

So... is the ;) an admission that you copied theirs? Does YC know about this?

Sincerest form of flattery. Plenty of room in this market for all players.

Indeed… We think it’s a better way to get paid and we hope that one day everyone will get paid on-demand (worldwide). Let’s make that happen! ;)

Interesting observation! There are 100+ startups in the world trying to help with on-demand pay! Most of them have a very similar UX/UI.

Below are the top few products that turn up in a Google search for "on-demand pay". None have the circle-focused branding that you copied from Wagestream, and none (except Payflow) are synonyms for Wagestream.

A suggestion: you seem to recognize that it's too late to deny that you copied Wagestream's branding wholesale. Commenting repeatedly on this thread implicitly acknowledging the fact while not addressing it head on is not a good look.

* https://www.dailypay.com/

* https://www.ceridian.com/products/dayforce/payroll/on-demand...

* https://www.paylocity.com/our-products/payroll/on-demand-pay...


> We thought employees would use our app because it’s innovative, but they mostly use it because they really need the money. This came as a surprise to us.

I'm having real difficulty working out how this could possibly have come as a surprise, of course people are using your pay advance app because they really need the money. Why else would someone take an advance on their pay?


It's probably just the degree. This is a common thread - any payments company who has enabled an "instant pay" feature will tell you they were surprised how much it was used.

Good point. It would have been more accurate to state that we were surprised at how much people used the app! Over 40% of employees that have access to our app use it! Also, we were surprised by how high user retention is.

Most likely because people are desperate for money because they need to eat, and your app will create a snowballing effect where the next month, they are even more desperate because a chunk has been taken off their pay.

This doesn't make much sense. The counterfactual is that they'd be desperate to eat and take out a sky-high APR short-term loan. How is the new ability to take zero-interest loans "creating" the snowballing effect instead of reducing an already-existing one?

This is called "the Copenhagen interpretation of ethics", in which any interaction with a situation in an attempt to improve it somehow gets warped into shouldering responsibility for the preexisting situation in its entirety. In this case, you've somehow transfigured substantially reducing the cost of credit into "creating global poverty".


The payday loan puts backpressure on using it because it is obvious that the person is paying to use it.

A zero interest loan does not communicate to the user that they are reducing their optionality until they are stuck.


This feels like quite a reach.

Understanding that you've received X pesos now and will receive X less in two weeks is a lot simpler than implicitly calculating the NPV/default risk of high-interest loans, both from an intuitive and an explicit budgetary perspective.

Even if we (incorrectly imo) assume this dynamic plays out the way you say it does, it's quite a bold claim to say that this putative psychological effect comes close to outweighing a 3000% (or w/e) reduction in APR.


Nope. It's not a reach. My personal experience with payday loans which, due to having a regular income, was that I paid them back (with high interest but not the crazy amounts people talk about from missed payments) on time. It wasn't the interest that got me, it was the lack of money. That you then had to deal with for the next month, meaning you were more likely to get another loan.

This thread is about the distinction between zero-interest loans and high-interest loans. The parent commenter claimed that people would be less likely to internalize the need to pay zero-interest loans because there's no interest. I said that the principal is a much more dominant concern. You are _agreeing with me_, but somehow couching your comment as disagreement?

> It wasn't the interest that got me, it was the lack of money.

This is precisely my point! The same thing applies for zero-interest loans.

Your comment says "it's not a reach [that the presence of interest is what makes people conscious of their payday loans]", and then says "the presence of interest is not what makes people conscious of their payday loans". Is this completely self-contradictory, or am I missing something?


No one needs to compute NPV anything. It's not that complicated.

All you have to do to get backpressure is to see that spending X pesos now means that you have less than X pesos in two weeks. Because, fees and interest.


You said that owing interest somehow implies "backpressure" in a way that zero interest loans don't. But the phenomenon you describe in this follow-up comment applies just as clearly to zero-interest loans: spending X pesos now means you forfeit X pesos later. The only difference is that, with non-zero-interest loans, you forfeit (X+I) pesos later, which requires an implicit calculation of whether time-shifting your spending is worth losing _I_ pesos.

Don’t you worry that easy access to credit will exacerbate the problem, leading people ever deeper in depth?

Our average user in Spain withdraws 50$, but their monthly salary is >1,000$. We also regularly survey users to see chat reasons they make withdrawals for.

Our conclusion is users are taking small portions of their salary to cover unexpected expenses.

Users tell us they love this, because otherwise they would have had to ask a friend for money.


In that case, wouldn’t the real solution to their plight be to learn to save money?

I know that is part of your offering, but your main product contradicts it completely, doesn’t it?

Easy borrowing does not seem to promote saving.


Indeed! That's why we released a second feature called "Saveflow". It allows employees to take a fraction of their payslip and put it into a virtual piggy bank. We just launched it but utilisation is great!

>In that case, wouldn’t the real solution to their plight be to learn to save money?

That is not something you learn. You just sit in your house and wait for the paycheck to come in. I have never learned to save money. It just happens to me.


This still seems no different from giving the employee a payday loan (admittedly at zero percent interest).

It's not going to solve anything because they are just taking money early that they will need next month.

It might seem attractive initially, but within a few months the status quo will have reset and those employees who were living paycheck to paycheck will still be living paycheck to paycheck, just now it will be day by day waiting for their accrued amount to increase.

I suspect as a company you could do well, but you aren't solving any problems for the employee. And you may find that as business pressure increases you'll end up exploiting them in some way because they are vulnerable and have little protection. It won't be long before someone on your board says something like "hey, we could make a bit more money if we start charging x% interest to get early access pay they won't accrue until next month. That's fair because we're taking the risk they might not accrue it all." And before you know it you are just as bad as every other payday lender out there.

This unexpected expenses thing sounds like poor justification to me.

And charging the company Vs the employee is no different. If you didn't charge the company they could instead increase the wages of their staff by the equivalent amount. You are just taking money out of the potential pot that goes to the staff. Staff costs is just a single line on our summary p&l which includes salaries and benefits.


> It might seem attractive initially, but within a few months the status quo will have reset and those employees who were living paycheck to paycheck will still be living paycheck to paycheck, just now it will be day by day waiting for their accrued amount to increase.

Except now they have money available to them in realtime, continuously according to the work they've put in, without having to wait for discrete points in time where their bank account refills.

> This unexpected expenses thing sounds like poor justification to me.

The fact that people use it shows people want it. The paternalism towards people who don't have enough money is really staggering. This line of argumentation reeks of "Poor people cant manage their finances - they dont know whats good to them"

> And charging the company Vs the employee is no different. If you didn't charge the company they could instead increase the wages of their staff by the equivalent amount. You are just taking money out of the potential pot that goes to the staff. Staff costs is just a single line on our summary p&l which includes salaries and benefits.

Salaries have other pressures maintaining them besides available funds for salary, like minimum wage and market rates. As we have known for years based on the utter failure of "trickle-down economics", salaries paid and available funds often have little to do with one-another.


Since as I understand you are expanding to LatAm, as someone having worked in Colombia for the last 5 years on b2b and b2c tech products for people on the low to mid side of the socio-economic spectrum, some top of mind thoughts. Hope it helps.

- Living paycheck to paycheck is a problem, but the underlying cause is more often than not having a job month by month. Even more so since the pandemic. The majority of people work in informality, only have contractor contracts or work for temp agencies with the outlook to eventually get hired into the client company.

- There is very little trust within society. People are very skeptical, justifiably so, to get screwed over by new financial products. Also employers have very little trust in their employees. At least from an European perspective it is ridiculous what hoops people have to jump trough to get basic jobs. Background checks, lie detector, medical exams, etc. Which means it can easily take 1 month+ from first interview to starting work.

- Economic gap is massive. The decision makers you are going to sell your product to often live and have lived their entire lives in completely different universes than the potential users. So you are going to have mixed experience how empathetic they are to the cause. Some certainly are and want to make a change.

- Many people don't have bank accounts where you could transfer the money to. As far as I know this has changed quite a bit during pandemic but cash and cheques are still very common.

- The very small amounts ($50-70) you mention are quite a bit of money here. Minimum salary is $260. A small amount here would be more like <=$5. Don't have in my head what the fees and taxes on bank transactions are.

- The users are going to have a ~$50 android phone laden with ISP nonsense, outdated OS, pre-paid expensive data plans and flakey internet connections where they live. So the app needs not just be shiny, but efficient.

Within the group we also launched products in Mexico and Peru, where some things are different but haven't been involved much in that. Happy to chat about if you are interested.


That's amazing insight smoe.

We are indeed aiming for low income worker population in LATAM and your calculus is right:

- Here we see around 50Euros for a salary of 900/1000 so around 5 to 7% of your salary withdrawn.

- We would expect even smaller quantities in LATAM.

App is super lean and accessible by every phone and building trust among our community (users & companies) is key.


Thanks a lot for sharing these learnings. We will keep them on our radar. Sure, would be great to chat!

It’s great that you’re finding a way to pay people quicker that’s less bad than payday loans!

What stops employers from paying wages more often right now? When I worked in the US, some places would pay you every two weeks. With instant bank transfers, couldn’t that frequency go down to weekly or daily, without the need for a middleman?


100 years ago, people were paid just after they worked. There are two reasons why that stopped being the case. Firstly, it’s a lot of work for the company. Secondly, it’s worse for the company’s cash flow. As others have also replied, the first is most significant.

A lot of it would depend upon how payroll is handled. There are plenty of employers where the hours worked are written on paper, then transcribed to a common document format and sent to payroll, then transcribed into the payroll software. Since so much of the process is manual, it is likely to be batched and performed weekly. Even when it is done daily, the daily is unlikely to include weekends (which is shifted to end of day Monday). In other words, they would have to completely alter their process to actually pay daily. That alone would likely make the process more expensive. Doing more bank transfers would add more expenses. The software used to handle payroll is a middleman for all intents and purposes, and that is unlikely to go away.

For what it's worth, I have seen that process used in both the private and public sector as well as with organizations that employ thousands of people.


As with most components of the financial system, change is very slow and painful because even when technology exists that leapfrogs previous bottlenecks (i.e. batching due to delays in information flow) the behavior of people and organizations is tightly adapted to the existing expectations. As it stands, most employers effectively get free 2-4 week payment terms from their largest suppliers (i.e. their employees) which, if removed, would immediately increase their working capital requirements by a substantial margin.

> There are plenty of employers where the hours worked are written on paper, then transcribed to a common document format and sent to payroll.

My understanding of this solution is also that it depends on the payroll systems? As such, they also depend on manual batching effectively, before the advance can be paid.


Hi Benoît & Avi,

As part of my advisory business, I've seen a few companies tackling this in Africa. My biggest question has been, isn't this a "feature" than can be deployed by the existing Payroll companies?

These days we have a lot of Credit As A Service companies. Why can't a Payroll service connect to them and provide this service as an add on.

To summarize my question: can your innovation get distribution before the Payroll services get (this) innovation?

Or wouldn't you inadvertently have to encroach into that space eventually?

Or do you see yourself extending towards the credit side of things?

All the best!


I mean, if workers are withdrawing money this month, which I presume is then taken off their wages next month, they are now in the hole, and even without interest, the problem just gets worse and worse, because then the next month they are more likely to withdraw early because they have less money.

I do not know if this is financially responsible. How exactly will this prevent a horrific snowballing effect?


If you step back for a minute, consider this question: when do you pay for goods and services? Usually, the moment you receive them. When does your employer pay you for the services you provide? …two weeks later, wut

Many businesses don’t get paid right away.

jkhdigital is right.

Also, bear in mind that our average user in Spain takes out 50$, whilst their salary is >1,000$. We also regularly survey users to see chat reasons they make withdrawals for. Our conclusion is users are taking small portions of their salary to cover unexpected expense.

It’s so much better than paying for an expensive overdraft!


You could say the same about credit cards and their grace periods, but plenty of people are able to use those without incurring fees.

This product doesn't even seem to have the risk of generating fees directly.


I see there are a lot of people knocking this. I agree it doesn't really fix root cause of the issues, but it does provide a better option than many of the existing ones. I can see this tool being used in a responsible way by a small percentage of people. I'm sure there are many others who would shoot themselves in the foot with it, as is true with many tools in life.

So overall, I'm trying to say that I do see some valid concerns here, but I also think there could be some value.


As interest rates are low atm (or even negative) it might not be an issue but why wouldn't employees take out the maximum loan every month (as they are not paying for the loans) and put that money in a bank account. Is this a risk you have considered and does the employer pay more if employees are doing that?

Sort of like this?: https://www.earnin.com/

This is one of 100+ players trying to solve this problem. It’s a real problem and lots of us are trying to solve it!

Isn’t this problem more easily solved by more access to credit cards? It seems like the examples where an advance is needed would be more easily, and even cheaply, solved by using a credit card and repaying on payday.

There are instant approval credit cards and low credit limit cards.

And credit cards even allow cash advances at 20-30% annually.

So, for the example with the gas station customer, using a credit card and carrying the balance for a few weeks would cost them $0 in fees if paid back in the same timeframe as this pay advance. Or they could take a cash advance from an atm and pay 30%/365*num days until repaid.


The difference, I think, is that the credit card model is an unsecured loan while Payflow seems more like receivables financing. Big difference in the perceived risk exposure.

Exactly, the risk is the first big difference. With Payflow, you can never spend more than you have already earned.

The second thing is most blue-collar workers in most countries can’t get credit cards at all.


Yes I think that is what is most confusing to me about why payday loans are so much more expensive. The creditors are taking on less risk than with credit cards and yet the return is greater.

The rates are typically high because they are loans of last resort and people still default. Typically people, in the US at least, have absolutely terrible credit and no one will extend to them.

And while there are exceptions, typically people with horrible credit are likely to continue the cycle.


What happens when an employer goes bankrupt? Heck of a lot of correlated risk.

Almost none low income workers have access to a zero-rate credit card with credit limit available and zero annual fees.

Besides that unpaid balance carries interest.

The idea is to de-risk by bringing their employers into the equation :)


It doesn’t need to be zero-rate as even a standard rate 15-20% card would be cheaper than this product, right?

If credit cards are payed without carrying a balance they are all 0%. So that’s at least 25-55 days depending on when the charge is made.


>In fact, we even give employers an optional feature where they can set a cap on the % of salary that their employees can withdraw. Can you clarify this?

Not OP; I read it like this: employers get to decide which portion of an employees wages are available for Payflow’s early withdrawal scheme. After that percentage of the wages has been withdrawn through Payflow, the remainder will be paid out normally, i.e. at the end of the month.

And if you pay on hours from the previous month or deduct hours not worked in the previous month and not the current month (as it mostly is in Germany), this is sensible to not have it at 100%.

Suppose an employee has a salary of 1,000$ per month. If the employer sets this filter at 50%, the employee can only withdraw up to 500$ on Payflow. Makes sense?



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