[UK] Fintech start-up launches on-demand pay pilot at data firm

A Scottish financial technology firm has joined forces with Mastercard to offer on-demand pay, allowing workers to receive their salaries weekly or even daily, Mail Online reports.

Hi55 Ventures was founded summer 2020 by David Brown, with the stated intention of changing the traditional monthly salary system to benefit both employees and employers. Mr Brown has received the backing of an unnamed global investment firm with over $50 billion of assets. 

Mastercard has agreed to provide cards to Mr Brown. The Hi55 founder has also set up partnerships with technology specialist NTT Data and banking platform Railsbank. At present Hi55 is reportedly undergoing a pilot with NTT staff in the hope of gaining support for the firm. 

Under Hi55’s system, Brown’s firm will step in to pay employees for a 'low cost', allowing employers to defer payments for eight to twelve weeks.  

Yesterday the entrepreneur told Radio 4's Today programme, 'We've actually brought a win-win for both parties where we can help the employer finance payroll and also improve the well-being of the employees by allowing them access to pay, or more frequent pay, free of charge, therefore eliminating payday lenders.

'The services are called early wage access. Predominantly, most of them, charge employees to access their wages whereas we refuse to charge the employee any fee for accessing their money because we think that's fundamentally wrong.

'If I can change how you are paid, then I should be able to help how you pay. A good example of that would be, if you have credit card debt and you can pay it weekly, then you would actually save 25 per cent of the repayment because you are actually paying a month interest rather than just a week. That can happen in all of the products in your life.'

Mr Brown also claims his firm can help businesses by giving them a new stream of capital. The investment firm will provide an undisclosed sum of funding for companies to pay their workers under the new system. Mr Brown says such funds would allow companies impacted by the economic effects of COVID-19 to recover and rebuild.  

He explained, 'We charge the employer £3.50 per employee because effectively we're re-engineering their payroll. 

'If the employer is very highly-rated, which some of our clients are, then it can work out at less than 2 per cent interest a year on the financing. If the employer is an SME, then that would go closer to 7 per cent a year.

'The overall vision of Hi55 and the partnership we've just announced with Mastercard is, wouldn't it be nice if payroll was like a credit card where at the end of the month you can determine whether you want to pay the interest only, whether you want to pay part of it or all of it. Wouldn't be great for the employer to have that flexibility in payroll? That's what we're heading towards.'

Mr Brown also claims that bringing in external funders allows employers extra time to pay. The investment is secured because employees count as senior preferred creditors, so if an employer goes bust workers hold a high spot in the queue of parties who will be paid. 

By Mr Brown’s account, this means providing firms with credit based on salaries is low-risk for investors.  

He said, 'This isn't a loan. It's been structured in such a way that it is a credit facility against payroll. This is structured to pay around pay asset finance, which is your employees are your greatest asset and if they can help you financially stabilise your company that's actually in the benefit of the employer and employee.'

A Scottish financial technology firm has joined forces with Mastercard to offer on-demand pay, allowing workers to receive their salaries weekly or even daily, Mail Online reports.

Hi55 Ventures was founded summer 2020 by David Brown, with the stated intention of changing the traditional monthly salary system to benefit both employees and employers. Mr Brown has received the backing of an unnamed global investment firm with over $50 billion of assets. 

Mastercard has agreed to provide cards to Mr Brown. The Hi55 founder has also set up partnerships with technology specialist NTT Data and banking platform Railsbank. At present Hi55 is reportedly undergoing a pilot with NTT staff in the hope of gaining support for the firm. 

Under Hi55’s system, Brown’s firm will step in to pay employees for a 'low cost', allowing employers to defer payments for eight to twelve weeks.  

Yesterday the entrepreneur told Radio 4's Today programme, 'We've actually brought a win-win for both parties where we can help the employer finance payroll and also improve the well-being of the employees by allowing them access to pay, or more frequent pay, free of charge, therefore eliminating payday lenders.

'The services are called early wage access. Predominantly, most of them, charge employees to access their wages whereas we refuse to charge the employee any fee for accessing their money because we think that's fundamentally wrong.

'If I can change how you are paid, then I should be able to help how you pay. A good example of that would be, if you have credit card debt and you can pay it weekly, then you would actually save 25 per cent of the repayment because you are actually paying a month interest rather than just a week. That can happen in all of the products in your life.'

Mr Brown also claims his firm can help businesses by giving them a new stream of capital. The investment firm will provide an undisclosed sum of funding for companies to pay their workers under the new system. Mr Brown says such funds would allow companies impacted by the economic effects of COVID-19 to recover and rebuild.  

He explained, 'We charge the employer £3.50 per employee because effectively we're re-engineering their payroll. 

'If the employer is very highly-rated, which some of our clients are, then it can work out at less than 2 per cent interest a year on the financing. If the employer is an SME, then that would go closer to 7 per cent a year.

'The overall vision of Hi55 and the partnership we've just announced with Mastercard is, wouldn't it be nice if payroll was like a credit card where at the end of the month you can determine whether you want to pay the interest only, whether you want to pay part of it or all of it. Wouldn't be great for the employer to have that flexibility in payroll? That's what we're heading towards.'

Mr Brown also claims that bringing in external funders allows employers extra time to pay. The investment is secured because employees count as senior preferred creditors, so if an employer goes bust workers hold a high spot in the queue of parties who will be paid. 

By Mr Brown’s account, this means providing firms with credit based on salaries is low-risk for investors.  

He said, 'This isn't a loan. It's been structured in such a way that it is a credit facility against payroll. This is structured to pay around pay asset finance, which is your employees are your greatest asset and if they can help you financially stabilise your company that's actually in the benefit of the employer and employee.'