Founded in 2018 by Portman Wills and Peter Briffet, Wagestream is a financial wellbeing company. Though new to the industry, it has rapidly emerged as an important force in the alternative lending scene. Wagestream is the first provider to introduce a service they call “workplace loans.” This has enabled employees to access up to £25,000 in credit, targeting a demographic often overlooked by conventional lenders. As of now, about 15,000 people have used these loans to their benefit.
Typical loans
Loans of between £2,000 and £5,000 are now the most popular choice for borrowers, typically repaid over 24 to 36 months.
Wagestream’s chief executive, Peter Briffet, along with chief technology officer Portman Wills, have positioned the company at the intersection of social responsibility and financial innovation. Founded with a powerful social charter that still fuels the mission, today the company heals with technology. It’s received backing from influential nonprofits including the Joseph Rowntree Foundation and Barrow Cadbury Trust, underscoring its commitment to improving workers’ financial wellness.
The workplace loans that Wagestream provides employers and employees start at an APR of 13.9% and go as high as 19.9%. Importantly, at least 51% of borrowers end up paying the highest amount in this range. For some employers, the max cap on these loans can be up to 34.9% APR. This rate is usually negotiated on a case-by-case basis.
To mitigate against affordability and default risk, Wagestream uses strict affordability and underwriting criteria for every loan that is issued. The assessment process incorporates detailed information from payroll systems, open banking data, credit bureaux, and the usage patterns of other Wagestream products. This multi-pronged approach makes lending at-risk neighborhoods smart business. This allows one simple thing — it makes sure that people borrow what they can afford to pay back.
Caster said that Wagestream’s model particularly advantages borrowers. These large and unexpected charges left customers averaging an APR of 62% from their previous lenders before switching to Wagestream. Her innovation The company’s unique structure allows it to save its borrowers an average of £593 per loan.
Although it has a highly-respected ethical stance as a B-Corp in 2022, the dangers and traps of predatory alternative lending is the continuing worry. First, critics claim that referring to what Wagestream offers as “streaming” can disguise the fact that users are effectively taking on debt. As financial consumer advocate Mick McAteer observed, calling them “buy now pay laters” sanitizes the reality of these high-cost loans.
“These services should always be referred to as loans or credit as that’s exactly what they are. Using terms like ‘streaming’ or ‘salary advance’ can downplay the fact that people are borrowing money.” – Mick McAteer
Borrowers often report having a frustrating or inaccessible experience when trying to obtain these loans. One user, Andy, reflected on his experience:
“It is easy to fall into a negative pattern, streaming wages early. But imagine streaming wages and also loan payments. You could end up being a wage slave, having to work just to pay your debts back.” – Andy
These sentiments highlight a critical aspect of Wagestream’s offerings: while they provide immediate financial relief for those in need, they risk perpetuating a cycle of debt if not managed properly.
JRF representatives recognized the urgent demand for ethical lending in today’s economic environment.
“For now, the need for credit among those living in hardship continues. Against this backdrop, there is a role for responsible and impact-focused lenders to help families manage the cost of essentials during periods of hardship.” – Joseph Rowntree Foundation spokesperson
Wagestream helps lower the immediate financial pressures that many employees are facing. Further, it seeks to move beyond just looking at general financial literacy and financial wellbeing.
These critics warn that increased ease of access invites the very behavior—over-reliance on credit—that loans were intended to discourage. They feel this reliance contradicts their mission of creating long-term financial security. Trant, a financial analyst, stated:
“We don’t view streaming as credit. It’s a different way that somebody is managing their day-to-day payments.” – Trant
This critical angle of vision is crucial and should be raised. Are workplace loans a promising financial solution, or are they a stopgap that could lead their users into even worse financial distress?