Wagely founders (from left to right): Tobias Fischer, Sasanadi Ruka and Kevin Hausburg
Earning Income (EWA) platforms, which allow workers to withdraw their earnings on demand, rather than waiting for payday, are on the rise around the world. Today, Indonesian EWA startup Lohnly announced that it has raised $ 5.6 million in strategic funding, led by Integra Partners (formerly known as Dymon Asia Ventures). Other investors included the Asian Development Bank (ADB) Ventures, PT Triputra Investindo Arya, Global Founders Capital, Trihill Capital, 1982 Ventures and Willy Swandi Dharma, former President Director of the insurance company PT Asuransi Adira Dinamika.
Founded in 2020 by alumni of two of the largest technology companies in Southeast Asia, Lohny expects to reach more than 250,000 users this year. Chief Executive Officer Tobias Fischer was a former Regional Lending Program Manager at Grab Financial Services Asia, while Chief Technology Officer Sasanadi Rukua was Vice President of Engineering at Tokopedia.
Fischer told TechCrunch that after working for financial services companies in Southeast Asia, he and Ruka saw that “cash flow management is the most pressing everyday problem for low and middle income Indonesians.”
While the pandemic worsened financial troubles, Fischer said more than 75% of Indonesians were already struggling to cover unexpected expenses between paychecks. Many borrow from family or friends, but if that option isn’t available they may turn to payday lenders who can charge more than 360% annualized percentages or pay overdraft and late payment fees to their banks until their next paycheck.
“This is the beginning of a diabolical and costly debt cycle that has long-term negative effects on individual financial well-being, which in turn has an impact on companies with higher sales, lower productivity and more employee credit,” said Fischer.
On average, more than 50% of employees at Lohnly corporate customers use it several times a month to track their daily earnings and access their earned wages. The company’s ultimate goal is to “build a holistic financial wellness platform for low and middle income workers,” which includes other financial services, including savings, insurance and smart spending products, said Fischer.
More and more companies around the world are allowing workers to choose when paid. Some notable EWA platforms include Gusto Cashout; DailyPay, which recently achieved unicorn status; Wage stream; Minu and Even. Lohny’s competitors in Indonesia include GajiGesa and Gajiku.
Fischer said Lohny “created the category of access to earned wages in Indonesia” and is a market leader with more than 50 large companies, including state-owned companies and multinational corporations. The new funding will be used to strengthen Lohnly’s sales team to close more company deals. Wagely’s current customers include PT Bentoel Internasional Investama Tbk (British American Tobacco); PT Supra Boga Lestari Tbk (ranch market); Beauty and Wellness Company PT Mustika Ratu Tbk; and the renewable energy group PT Kencana Energi Lestari Tbk.
In a press release, Wilson Maknawi, President Director at PT Kencana Energi Lestari TBK, said: “We offer our employees financial stability in times of uncertainty. It’s incredibly important and a critical step in the long-term resilience of our business. With no changes to our payroll process, the Lohny solution has been proven to increase our business savings and help our employees avoid predatory loans while providing savings and budget tools that improve their financial literacy. “