Floatpays provides financial lifeline for the employed
South African fintech firm Floatpays says it has empowered thousands of local employees struggling to make ends meet due to the COVID-19 crisis, by providing employee financial support.
Established by fintech guru Simon Ward in 2019, Floatpays says it is shaking up the financial services industry by allowing organisations to provide employees with access to a portion of their earnings, with a once-off transaction fee.
Disrupting the traditional 30-day pay cycle, Floatpays collaborates with companies to provide early access to earned wages, financial literacy training and budget planning tools, helping employees to learn how to plan for expenses and pay their bills on time.
Unlike a loan, the start-up provides an advance on the employee’s already earned money.
Since its commercial product launched publicly in July, the fintech firm says it has been on-boarding employers through its cloud-hosted technology platform, leveraging a large number of the services available on the Amazon Web Services platform.
The launch followed a successful six-month pilot programme with a select number of local employer partners.
Floatpays competes with SmartWage and Level Finance, which have developed a fintech platform that enables employees to track their daily earnings and offers access to a portion of their salaries, when they need it.
According to Ward, around 77% of South Africans are struggling financially due to the COVID-19 crisis. What’s more, 86% of these consumers are concerned about their ability to pay their current bills and loans, with 21% planning to borrow money from family and friends, 8% opting to take out personal loans and 19% having no idea how they will pay.
“Debt not only impacts a person struggling to make their payments, but those around them too – including their employers. Floatpays acts as a technology partner for employers and a financial enabler for employee benefits.
“While employers might consider providing financial assistance to help their employees climb out of the debt hole, this can lead to harming employee relations and have potential cost ramifications should the employee be unreliable with repayments, or worse, disappear with the money.”
The Floatpays platform consists of iOS and Android apps for smartphone users, and a USSD solution for feature phone users.
After an employer signs up with Floatpays, the company provides free integration with the employer's payroll system, to fully on-board an employer.
The technology automatically integrates with the business payroll software to produce payslips that reflects transactions.
“We then upload employee information in a secure POPI-compliant data security service. Next, we help employers configure the rules on how their employees can access the Floatpays solution and their earned wages. From this point on, we offer full customer support (in-app chat, telephone and e-mail support) for all employees using Floatpays.”
The company says it takes a small percentage of each transaction fee paid when employees withdraw earned wages via the Floatpays platform.
South African-born Ward has worked globally for the past 20 years, gaining experience in scaling and exiting large fintech and e-commerce companies in the UK, Europe and SA.
He has worked for various firms, including Play.com (acquired by Rakuten), Moonpig.com, Photobox (acquired by Exponent Private Equity and Electra Partners) and Prodigy Finance.
“In future, Floatpays is looking to establish its employee benefits platform here in SA before looking to expand into other similar African country ecosystems where informal lending and high debt spirals are a problem for African workers,” he concludes.