In this article, we would like to talk about an innovative but simple solution to help underbanked employees.
Have you heard of EWA?
Most people have not – it stands for Earned Wage Access. It is a new and innovative way to help workers and employees access salary which they have already earned but is not due to be received until their pay day at the end of the month. To help situations when urgent purchases need to be made, but the paycheck has not arrived yet.
Edward Shen, our Managing Partner, recently sat down with Paywatch Chief Financial Officer Kenneth Chow to discuss the challenges and struggles of many workers and employees just before their next paycheck arrives.
In this article, we will introduce the concept and mechanics of Earned Wage Access and next week we will publish the entire interview between Edward Shen from QIDS Venture Partners and Kenneth Chow from Paywatch.
Earned Wage Access or EWA – Mechanics, Importance, Relevance, Opportunity
In Asia, especially South East Asia, there are large swathes of people who have limited or no access to banking facilities. In Philippines for example, less than 5% of the population have a credit card.
Such people have been ignored by banks because of an insufficient credit score or lack of credit history. Their options to access credit become extremely limited. Either they borrow from friends (which creates mental pressure) or borrow from predatory lenders which punish them with high interest and fees. They eventually end up in a debt cycle forever trying to make ends meet.
EWA is about trying to break that cycle and allowing people to take control of their finances and grow their credit profile. So that people can make ends meet whilst preserving their dignity.
For example, Sarah a single mother who works in a low paying job and is living pay check to pay check. Her child is ill and she needs to urgently buy medicine but she has no friends to borrow from and she doesn’t want to go to a loan shark. What can she do?
What if she could withdraw some of her earned wage before the next payday at an affordable fixed cost?
Let’s take a look at the illustration below.
Earned Wage Access or EWA is the ability of employees or workers to access the wage they have earned already from the last salary date until today.
By using EWA, Sarah can access RM500 to buy for any necessities without going to friends and family or predatory lenders. She can avoid the embarrassment of asking for money from her social circle and avoid the high interest debt trap created by predatory lenders. She has stronger control over her finances and her life.
You may continue to read about the Interview with Kenneth Chow of EWA Pioneer Paywatch. 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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