In a time of pandemic-related financial and economic hardship, waiting for a payout once a month can be difficult in the face of emergencies, unexpected medical bills, and unexpected expenses.
The inability to access earned wages during tough times can also increase the likelihood of employees resorting to payday loans at high interest rates, further worsening their dire financial situation.
In Spain, pay advance startup Payflow has tried to solve this problem for workers by allowing them to access their earned wages “when they want, as often as they want and receive them [funds] immediately,” co-founder Avinash Sukhwani told PYMNTS.
“Millions of Spaniards live from day to day and are only paid once a month. In an increasingly immediate world, this cannot be a reality,” Sukhwani said, adding that allowing workers instant access to their earned wages multiple times a month removes financial strains, which in turn translates into greater productivity for businesses.
Compared to other companies in the pay-on-demand sector, Sukhwani said Payflow, which launched in 2020, sells its product to businesses for a monthly fee, without charging employees a direct fee for the service.
“The Workers’ Statute recognizes access to wages earned as a right. It would not be good if workers were being sued for their rights,” he said. “She [companies] offer their employees Payflow as a social benefit.”
Continue reading: 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 service that improves employee financial well-being is extremely valuable.
“We noticed that with our customers [have been able to] Hire 27% faster, reduce their turnover by 20% and since then increase the productivity of their employees by 10% [using] payment flow. Happy employees make happier companies and our product helps increase employee satisfaction,” he said.
Reach millions of employees
So far, the model has gained popularity among workers, which has the highest level of acceptance among companies using the platforms.
“In just two years, Payflow has become the regional leader in access to earned wages [more than] 100,000 users and [over] 175 customers, 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 brought its total funding to nearly $14 million, and with a 0% churn rate and never lost customer, Payflow stands out through his work as a differentiator from an increasingly contested space, he noted.
Going forward, the Spanish fintech plans to evolve from a payroll company to a neobank, expanding from its current 100,000+ users to reach millions of employees across Europe and Latin America.
“To achieve that goal, we would need to significantly increase the user base and introduce features that allow employees to do more with their money,” he said, acknowledging the huge challenges that come with an ambitious plan like building a connected to the digital bank.
“Many have tried and have not been successful because it is a very complex product to build from all points of view, including financial and operational [and] regulatory,” he noted.
But after the success Payflow has experienced over the past two years, Sukhwani said the company isn’t slowing down any time soon and remains focused on its goals and objectives.
“In 2022 we want to double the workforce and launch two more products. We have plans to continue our international expansion through Latin America and Southern Europe, [starting in Italy and Portugal],” he said.
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