In the previous article, we introduced the concept and mechanics of Earned Wage Access (EWA). Now we would like to share the entire interview with Kenneth Chow, Chief Financial Officer of EWA pioneer Paywatch.
Edward: What is Paywatch’s story?
Ken: Paywatch co-founder, Mr Richard Kim, used to have business interests in bars and eateries in South Korea. His staff, who were mostly in their early 20’s, would ask for salary advances from him on a regular basis. If he did not provide the salary advance to them they would either draw cash from their credit cards or borrow from predatory lenders. Having worked in the credit card industry for 20+ years, Richard knew the alternative options these young people were turning to was terrible for their credit profile and financial well-being. And so he set out to solve this problem by creating Paywatch.
‘Why are we doing this’ is an important aspect of Paywatch platform’s story. The reason employers and employees like Paywatch are the same as why our investors like us – Paywatch is not predatory, but its commitment to improve financial wellbeing for every employee. This ethos continuously drives Paywatch to innovate in product positioning while building a solid commercial model embedded in its product roadmap towards profitability.
Edward: So what exactly is Paywatch doing?
Ken: Paywatch is offering Earned Wage Access through our proprietary platform to enable employees to access their earned wages instantly before payday with zero interest. We work with major banks to provide employees with the necessary tools to improve their financial wellbeing, leading to greater employee retention and productivity.
Edward: Does Paywatch take the credit risk?
Ken: Paywatch does not take credit risk. Our bank partners are the financiers who provide the funding, but we ensure the risk to them is low by working with employers to set caps on how much can be withdrawn and be deducted from the user’s paycheck. All the employers we work with are large MNCs who are serious about ensuring the financial well-being of their employees.
Edward: Why is EWA in particular important in Asia?
Ken: Paywatch positions its EWA solution as a credit card challenger. In markets where credit card penetration is low due to lack of financial access it provides an alternative choice to employees. E.g. in Malaysia credit card penetration is less than 20% and in Philippines less than 5%.
Conversely for markets such as South Korea which has high credit card penetration, they are increasingly being viewed as a debt trap amongst the younger generation. Young people want to avoid spending beyond their means and hence choose to use products such as Paywatch.
Edward: Is it easy for a company to offer EWA? What would be the integration work required for such company?
Ken: Adopting Paywatch does not disrupt a company’s existing HRMS system or cashflow. Our in-house experts are experienced in providing solutions to integrate Paywatch into different HRMS systems at different levels of connectivity. Our onboarding team is also well versed in providing training and a smooth registration journey to both company HR and employee users.
By using Paywatch’s HR administration portal, companies have the flexibility to customise how it deploys EWA to its employees.
Edward: Why is your EWA product so compelling to employers?
Ken: The labour market has always been extremely competitive, especially for frontline workers. And so companies adopting EWA are seeking to gain an edge in attracting talent and talent retention. Paywatch is able to provide that edge more strongly than other EWA platforms.
What sets Paywatch apart from other EWA platforms is firstly the cost to the user and secondly the structure of the product. Firstly, Paywatch does not charge interest, only a nominal transaction fee which, currently in Malaysia, is significantly lower in comparison to what our nearest competitor is charging. Secondly, the way we structure our product is to work with banks and be immersed into the regulatory environment. Our product is cleared by local central bank regulators and complies to bank standard. What that means is that employers can take comfort that there is no legal risk of our product being shutdown and that employee data privacy and security are being held to the standard equal to what any regulated financial institution would need to comply with.
And finally because of Paywatch’s strong track record in working with financial institutions we are able to evolve our platform and provide additional value add products to users. In the not too distant future we look to add other functionalities such as micro financial products and other employee benefits.
Edward: Beside partnering with more employers on EWA across Asia, where do you do the growth of Paywatch?
Ken: The salary is the beginning of everyone's financial journey, so EWA captures the start of that journey. Over time we will provide additional services to accompany our clients on the financial journey, i.e. spending cash on bills, financial services, leisure, insurance, etc.
Edward: Nowadays ESG is very important. How is Paywatch's EWA product helping employers have positive social impact and clearly differentiating Paywatch from predatory lenders?
Ken: As already mentioned unlike our competitors, all Paywatch’s products have been approved by the central bank of its respective markets. For instance, in South Korea the EWA product was in the regulatory sandbox of the FSC (Financial Service Commission of Korea) and in Malaysia our product has been approved by Bank Negara Malaysia. Obtaining this endorsement shows Paywatch is a responsible company which plans to be in business for the long term.
Paywatch is also the winner of 2022 Gig Economy Challenge held by The Asia-Pacific Economic Cooperation (APEC), Bank Negara Malaysia (BNM) and The UN Capital Development Fund etc. Learn more here.
Edward: Ken, this is indeed a great session and many thanks for your time and introducing us to Paywatch and mechanics of Earned Wage Access and how it helps employees improve their financial wellbeing.
If you need more information about Paywatch, please feel free to contact our Managing Partner Edward Shen via LinkedIn or email.
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