Online Lenders

Monzo has 200,000 people using its salary advance feature

  • Challenger banks are going after their users' paychecks.
  • In return for setting up direct deposit, firms like Monzo enable users to get paid early.
close

Email a Friend

Monzo has 200,000 people using its salary advance feature

Challenger bank Monzo now has 200,000 customers using the app to get paid a day early.

  • After launching its salary advance feature in August of 2019, £687 million has been claimed early by 183,000 customers, with a quarter taking more than £1,000.
  • Salary advance, popular with many of the challenger banks, enable users who have direct deposit set up for their wages, to get paid a day to a few days earlier than the usual pay cycle.
  • Challenger banks want to become the primary banks for their customers. One way to do that is to go after their clients’ salary deposits. In return for setting up direct deposit, some challenger banks offer salary advance functionality. 
  • While firms like Monzo have this built into their apps, there are standalone firms that provide salary advance-type functionality, including PayActiv, Earnin, and Even.
  • These stand-alone firms have raised hundreds of millions of dollars in venture capital by some of the best firms.

A growing trend among large enterprises is to provide some sort of salary advance options to their employees, especially for hourly workers.

  • Salary advance firms employ different revenue models — from free, to subscription, to tips, to fees. 
  • These different models, some more opaque than others, make it hard for users to impute the total cost of these loans.
  • Some of these firms have been accused of dressing up payday loans in fintech clothing , charging usurious rates, and have been sued.
  • It’s not only high rates that have people’s attention. There is growing concern that salary advance perpetuates a cycle of debt that makes it hard for consumers to get out.

0 comments on “Monzo has 200,000 people using its salary advance feature”

Outlier OpinionsMakers

Member Exclusive, Online Lenders

Lending Briefing: Debit cards are taking over

  • This year, debit cards have emerged as the preferred payment method for the majority of US consumers, dethroning credit cards.
  • Younger generations are behind this switch – even though they're also getting credit cards, Millennials and Gen Zers prefer to pay with debit.
Iulia Ciutina | September 28, 2022
Member Exclusive, Online Lenders

Lending Briefing: SaaS SMB lending competition heats up as more fintechs enter the market

  • More fintechs are coming into the US market to offer banks solutions that digitize and streamline their SMB loan application and decisioning process.
  • As this segment of the market is drawing more interest, we sit down with Ranqx to delve into its strategy of scaling in the US market.
Iulia Ciutina | September 14, 2022
Online Lenders, Sponsored

Without the right data, your bank could be turning away qualified borrowers

  • Using alternative data provides a more holistic view of a consumer's creditworthiness.
  • Financial services expert Gary Harvey explains how FIs can achieve this using the right data sets.
Equifax | August 23, 2022
Member Exclusive, Online Lenders

Lending Briefing: Gen Z is expanding the credit market

  • The US credit card market continues to grow: the number of credit cards topped 500 million for the first time ever at the end of Q2 2022.
  • Younger generations are behind the increase, experts say, as more Gen Zers start their credit journeys.
Iulia Ciutina | August 17, 2022
Member Exclusive, Online Lenders

Lending Briefing: The digital lending fintechs attracting capital in a down market

  • Funding is down across the fintech sectors compared to last year, with less capital going to big segments like payments, baking, and lending.
  • We are taking a look at some of the digital lending fintechs that still secured financing in this past quarter, in spite of the down market.
Iulia Ciutina | August 03, 2022
More Articles