Tamir Sacks, CEO at PayCurve
The ongoing financial pressure faced by South Africans is clearly evident from the latest user data released by local financial wellness expert PayCurve.
PayCurve is an SA born and bred fintech champion using advanced technology to deliver employee centric solutions which include earned wage access (EWA), financial education and savings tools. EWA is one of the fastest growing benefits in SA, effectively allowing employees to navigate a pay cycle by providing access to a portion of their already earned wages before their regular payday, without costly fees or high interest rates. This mid-month liquidity means EWA is key to breaking the credit reliance cycle by providing the necessary support for South Africans living through the cost of living crisis.
The EWA employee benefit has become mainstream globally and has made its way into SA within the last 4 years. Some of the largest corporates and smaller companies across multiple industries and market segments are adopting the benefit for their employees.
PayCurve is unique within the South African EWA industry, as it adopts smart algorithms by combining multiple data points to calculate the amount available for withdrawal. As a result, PayCurve adopts responsible and sustainable measures when providing access to earned income.
The data shows that 20.6% of PayCurve’s EWA users are accessing their monthly wages early to pay for transport. More than 18% are using EWA to pay for family emergencies, and 11% percent are withdrawing their wages early to pay for airtime, while 10,1% are using their withdrawals for groceries.
With 8 out of every 10 employees in South Africa being reliant on short term credit to bridge the gap, EWA is giving employees the ability to live within their means, ultimately breaking this reliance cycle.
PayCurve’s range of solutions will become increasingly critical given that the SA Reserve Bank’s latest Quarterly Bulletin, published in July, said South Africans have over R2.35 trillion in debt. Debt Busters’ latest report paints an even darker picture: South Africans have an exceptionally high debt service burden, as they need to spend around 62% of their take home pay to service their debt before coming to debt counselling. Added to this, business confidence is declining, which has seen companies spending less and cutting back on hiring.
And wages aren’t always keeping up. Many employers are unable to provide salary increases which keep pace with inflation. July 2024 data showed that regular pay growth in the private sector was slightly down, from 6.0% to 5.9%, and growth in the public sector had risen from 6.1% to 6.3%.
But there is some relief in sight, particularly for employees working at companies that have recognised the value in supporting their embattled colleagues.
PayCurve CEO Tamir Sacks said: “Technology has afforded us an invaluable opportunity to change the old paradigm around indebtedness, payday loans and financial pressure, which has plagued our workforce for decades. By leveraging the precision of data to better understand the financial pressures our people are under, we can ensure the most appropriate products and support structures are put in place.”
Sacks said: “Financial wellness technology significantly impacts employee behavior by offering an alternative to traditional sources of intra-month liquidity, such as regulated and unregulated payday lenders. Instead of relying on these options, employees can now manage their pay cycles using their accrued income. This shift encourages them to live within their means rather than continually relying on borrowed funds.”
ENDS
