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Executive column: Wagely bills itself as on-demand alternative to predatory lending
Tobias Fischer, cofounder and CEO of earned wage access (EWA) start-up Wagely, says on-demand wage payout can help workers avoid predatory lending, especially when people need emergency cash amid the pandemic.
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Wagely cofounder and CEO Tobias Fischer (Courtesy of Wagely/-)
T
he COVID-19 pandemic has made Indonesians realize that access to emergency funds is essential, as reflected in an 11 percent increase in bank savings in 2020. Those unable to save up money, however, might fall for predatory lending schemes to make ends meet.
The Financial Services Authority (OJK) warned consumers about 86 unlicensed online lending companies in May. Services offered by such companies are often fraudulent and might involve high fees or predatory debt-collecting methods.
Earned wage access (EWA) start-up Wagely was established in April last year to tackle employee cash flow problems, giving people access to their wages before payday to cover urgent needs.
The Jakarta Post’s Eisya A. Eloksari interviewed Wagely cofounder and CEO Tobias Fischer on July 5 to learn about the company’s plans and how EWA could help employees and employers alike.
Question: What is the reason for establishing Wagely?
Answer: I have seen firsthand that managing cash flow is one of the most pressing issues for low- and middle-income workers in Indonesia. When faced with urgent cash needs, they can borrow from friends or family, [or from banks, but then] they either pay overdraft or late fees.
Workers often take to loan sharks or predatory lending platforms, too, which would overcharge them. It is a very costly, vicious cycle of debt that has a lasting negative impact on employees’ financial well-being, which in turn impacts businesses. So, giving employees the ability to access salary and financial education is much more affordable and sustainable than loans.
