ImpactAlpha, May 21 – The number of high-cost payday loans Britons are taking out is on the rise, suggesting that consumers in the U.K. are increasingly stressed in meeting immediate and short-term financial needs. London-based Wagestream has raised £40 million ($52.5 million) in debt and equity to help consumers break the debt cycle by allowing them to access wages as they earn them, rather than getting a monthly paycheck (as most Britons do.)
“The antiquated monthly pay cycle inflicts huge financial damage on household finances,” Wagestream co-founder Peter Briffett said. “Too many people are pushed into a corner by in-work poverty and forced into the hands of payday lenders and high-cost credit.”
Wagestream has developed an app that allows employers to make employees earned wages accessible anytime without changing their own payroll cycles. Employees pay a flat fee of £1.75 each time the make a draw-down. The app also provides financial health education to enrolled employees.
Wagestream’s model is similar to Even in the U.S., which also partners with employers to help consumers avoid high-cost payday loans.
The company’s funding round includes £15 million in Series A equity funding, backed by early stage venture capital firms Balderton and Northzone and £25 million in debt from savings and lending bank, Shawbrook.
Prior investors include QED, the Joseph Rowntree Foundation, the London Co-investment Fund and Village Global.