Wagestream, a financial technology company, has developed a “financial wellbeing” app designed for low-wage workers. The app provides cutting-edge solutions that help employers enable employees to get their wages in advance. It provides loans on better terms than existing high-interest alternatives. The dealership aggregating company has agreements with 4,141 dealers. This goes right up to household names such as Superdrug, Domino’s, Halfords and Schuh, plus many NHS trusts.
The centerpiece of Wagestream’s service is its salary advance program. Workers have the ability to access up to half of their earned wages before payday. This provides them with short term financial relief at their time of greatest need. A charge of users’ choosing goes into this paycheck protection fund, automatically deducted from users’ wages on payday. This model gives workers the tools and resources to take control of their finances and plan better for the long haul. It further protects them from falling into the cycle of predatory high-interest debt.
Wagestream is supported by Joseph Rowntree Foundation through the Fair by Design Fund alongside other social impact investors. The firm is known for its recent backing of Balderton Capital, a former backer of payday lender Wonga. This support is a testament to Wagestream’s deep conviction to build ethical financial solutions. These solutions are purpose built for people who have been ignored by mainstream banks.
Britain-based Wagestream debuted a new product called “workplace loans” that’s aimed at helping low-wage workers avoid predatory debt. These loans will be made directly to employees of chosen firms. Workers can take loans of up to £25,000. Each employer negotiates a max APR for their employees, but that max APR can only go up to 34.9%. They only want to lend to people who earn over £2,000 a month before tax. Fill out a simple online application, and you can be approved to borrow as little as £1,000 in just hours!
The loan application process is built to be as efficient as possible, with the whole application taking under ten minutes to complete. Once approved, repayment is simple due to automatic wage-based repayments. Repayments are at the workers’ discretion and can be done via direct debit. If things go wrong, borrowers are able to temporarily relieve their payments, but this will take more work and conversation with the firm.
Wagestream bills itself as an ethical alternative to low-wage workers who would otherwise turn to higher-cost loans. The average APR across these types of loans can be as high as 62%, making Wagestream’s interest-free offerings especially attractive for workers in times of need.
“Wagestream was founded on a social charter to improve workers’ financial wellbeing. By partnering with employers, we help people who are underserved by traditional financial institutions to earn, learn, save, spend and borrow on their own terms.” – Wagestream
The initiative has received a wide range of reactions from environmentalists to Republican leaders. Advocates are quick to point out that products like Wagestream’s can help employees avoid the need for predatory payday loans. A spokesperson from the Joseph Rowntree Foundation noted, “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.”
As some critics have pointed out, there are certainly risks associated with more democratized credit. Nadine Houghton of the trade union group said it was similar to payday loans. She stated, “For low-paid workers to have the ability to access credit at such high interest rates at the click of a button – it’s like payday loans.” Houghton emphasized the importance of fair wages, asserting that “we want our members to be paid properly for the work they do so they can have savings and don’t have to have loans.”
Ascension is deeply committed to expanding financial inclusion. While they cheer models that provide more affordable options, they are quick to note that these answers don’t substitute for fair wages or a robust social safety net. They remarked, “Our priority is to support models that can provide more affordable, responsible alternatives, using stronger data and affordability checks than were available before.”
Wagestream puts low-income earners in control of their financial futures. It empowers them to tackle tough obstacles and achieve increased independence over their finances. The company is committed to ensuring that their products produce positive outcomes for their users. Their vision is to create a more inclusive and equitable financial ecosystem.
“We are proud to offer a fair, accessible alternative which helps our members to build better financial futures. We are confident that Wagestream’s products deliver positive outcomes, and we remain dedicated to building a more inclusive and equitable financial system.” – Wagestream
Critics, such as Sara Williams, have criticized the business model. Consumer advocates caution that it could inadvertently push users to incur short-term liabilities before searching for more expensive alternatives. Williams cautioned employers to consider whether such practices align with the best interests of their workers: “A business model that gets people to take increasing amounts of short-term 0% debts and then sells them an expensive loan to clear it raises serious concerns.”