Local fintech operator Paymenow has secured a R400m line of credit from Standard Bank to help fund its business of giving employees access to their earnings instead of having to wait for the end of the month.
This week Standard Bank extended the working capital facility structured by Stellenbosch-based earned wage access (EWA) provider Paymenow.
Founded in August 2019 by former Springbok and Western Province rugby player Bryan Habana and businessman Deon Nobrega, Paymenow is an app that allows employees to cash out a percentage of their earnings — before payday — and this amount is then deducted from their salaries.
The move is seen as an endorsement of the EWA business model and as part of a broader effort to stop predatory payday loans and promote financial responsibility among South Africans, especially encouraging savings.
For employers, it has become a tool for employee retention and “reducing financial stress-related absenteeism and improving overall workforce wellbeing. The solution requires no changes to existing payroll systems and carries no cost or risk to employers, while delivering measurable improvements in employee satisfaction and engagement”.
Africa expansion
Paymenow will also use the facility as part of its war chest as it continues its international expansion in strategic African markets, building on its presence in SA, Namibia and Zambia. The company says it has identified significant opportunities in additional jurisdictions “where traditional financial services have failed to adequately serve the needs of working populations, leaving them vulnerable to predatory lending and perpetual debt cycles”.
This latest deal adds to the R250m debt facility through Rand Merchant Bank (RMB) that the company raised in 2023, about $14m at the time.
Paymenow is based on similar business models in the UK such as Wagestream, which works with employers to let employees draw down a percentage of their income per month for a flat fee. The model has gained some interest with Wagestream having raised $51m (R847m) in 2019 and $21.8m more in 2024 for its own business.
As with Paymenow, Wagestream secured a £300m debt financing facility from banking giant Citi last year.
In SA, the industry is in its infancy but with Paymenow and competitor SmartWage having launched about the same time, competition is likely to grow.
Paymenow makes its money through transaction and services fees paid by employees that opt to take a portion of their earnings before payday. That said, some employers have decided to take on the charges on behalf of their employees, Nobrega said.
Nobrega, CEO of Paymenow, said: “This substantial facility from Standard Bank Group demonstrates that leading financial institutions recognise the transformative potential of earned wage access and are willing to invest significantly in its growth.
“The funding will enable us to accelerate our expansion across Africa, bringing financial dignity and flexibility to millions more workers who currently struggle with the constraints of monthly pay cycles and resort to expensive credit to bridge gaps in their cash flow.”
For Africa’s largest lender the deal adds another notch to an already extensive list of funds ploughed into local technology backed businesses.
“This partnership showcases our capability to leverage our regional footprint and innovative digital banking solutions to support fintechs and new business models across the region,” says Noloyiso Mpanza, head of sustainable finance, transaction banking at Standard Bank’s corporate and investment banking unit.
In 2024, the bank provided fintech start-up Float with an $11m facility to help with the rollout of its card-linked instalment platform, supporting its growth plans for four years.
On tech infrastructure, Vumatel and Dark Fibre Africa’s parent company, Maziv, secured a R25bn loan led by Standard Bank for a fibre expansion initiative in late 2023. In 2022, Standard Bank backed MetroFibre Networx’s R5bn fibreoptic expansion through a similar arrangement.
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