The UK-based fintech startup Wagestream that provides an alternative to payday loans by giving employees access to their earned wages any time, has secured a £4.5 million funding round from QED Investors, Village Global, London Co-Investment Fund, and others.
Wagestream claims to be the first service of its kind to be accredited by the FCA in the UK. It states its mission as to “end the payday poverty cycle,” which affects a significant number of British families. The company cites a research paper showing that over half of all families can't afford an unplanned expense of £250 — about the same amount as the average payday loan in the UK.
Wagestream claims that its solution can be implemented by companies without affecting their financial processes, payroll, or cash flow. The startup already has 20 pilot customers, including both employers and partners like Fourth, a major provider of cloud-based hospitality solutions.
Wagestream's business model is to charge the employees a flat fee of £1.75 per withdrawal.