CASE STUDY 2: PAYWATCH EWA
Paywatch enables early salary withdrawal for Malaysians All withdrawals will automatically be paid back to the bank by the employer on payday. MALAYSIA
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alaysian employees know what it’s like to be short on cash with few options for financing. Over half of the population remains underbanked, with 55% of adults living in the country, according to data from consultancy firm Bain & Company. As a result, many are forced to rely on unsustainable borrowing practices, such as getting muchneeded cash from informal lenders and shouldering the burden of high-interest rates. Paywatch is floating them a new solution, however: employees can now withdraw up to half of their monthly income in advance at no interest. In partnership with Hong Leong Bank in Malaysia and Hana Bank in South Korea, employees can withdraw up to 50% of their monthly income instantly at no interest through a regular ATM, at the rate of just a regular ATM withdrawal fee. “In addition to providing liquidity to the workforce, through Paywatch’s partnerships with major banks, Paywatch also connects underbanked users with direct financial access to these reputable banks. We thus serve as a bridge for our users to start accessing the banking system, as well as certain financial services that, frankly, they otherwise would not have,” Alex Kim, President and Co-Founder of Paywatch, told Asian Banking & Finance in an interview. Bank partnerships Paywatch’s offering is in stark contrast to other EWA solutions in the market, who are not partnered with other banks. According to Kim, other players have to borrow money themselves to fund their EWA services. This results in users having to shoulder high withdrawal fees in order for the service provider to pay the interest. “That’s where our partnerships
We are giving users the same access without the high-interest rates we find on other financial solutions
Alex Kim
Richard Kim
with banks come in. When our users request access to their earned wages, the funds are remitted directly by our bank partners to the user, and then repaid by the employer on payday. This allows us to keep withdrawal rates very low, akin to a nominal standard ATM withdrawal fee, safeguarding our users from additional financial burdens,” Kim said. It’s not just the customers whose credit is safe with this arrangement. Banks and Paywatch itself hold more assurance that the withdrawn money will be paid back. “All withdrawals will immediately and automatically be paid back to the bank by the employer, on payday. That being said, we recommend a withdrawal limit to safeguard employees from any financial issues. Employers can decide what that limit is, but generally, it ranges from 20% - 50% of their earned wages,” Kim shared. The concept in itself is not foreign. Kim said that the same arrangement is often being used by people with credit cards to cover certain payments that are due immediately,
and then use a certain percentage of their salary the following month to make the necessary repayments. “With Paywatch, we are giving users the same access, but without the high-interest rates we find on other financial solutions,” he said. The service first launched in South Korea, with Paywatch teaming up with Hana Bank to service cash-strapped Koreans. Prior to that, Paywatch was accepted in the regulatory sandbox of the Korean financial regulators, which led to their partnership with Hana Bank. “Our founder and CEO, Richard Kim, as well as our senior officers have had decades of experience in consumer finance at Citibank, MasterCard and HSBC throughout Asia. With this combined background in banking from our leadership team, we were able to create a solution that addressed pain points in the market,” Kim shared. The service has since softlaunched in Malaysia in 2022. Paywatch now counts Lotus, Metrojaya, QSR Brands, Wilmar, and redONE amongst their customers. Filipinos may be next to enjoy the service in the near future. “Our main focus for 2023 is growing in Malaysia. However, we are also looking to expand our service into the Philippines by the end of 2023, and more markets across Southeast Asia the year after,” Kim said.
Paywatch connects underbanked users with direct financial access to reputable banks (Photo courtesy of Paywatch)
ASIAN BANKING & FINANCE | Q1 2023 45
