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

As Feds increase fintech scrutiny, experts outline a BNPL regulatory framework

  • After experiencing a meteoric rise in recent years, the BNPL industry is bracing itself for increased regulation in the US as government agencies are looking to widen their oversight into the fintech sector.
  • With concerning signs regarding credit quality, risk intake and its effects on consumers, industry experts are advocating for more regulations and offer recommendations of what these could look like.
Iulia Ciutina | May 04, 2022
Member Exclusive, Online Lenders

Lending Briefing: BNPL regulation and the growing digital lending market

  • The BNPL market needs more regulatory oversight in order for consumers to be protected, new research suggests.
  • The fast-growing BNPL industry exists in a legal gray space and mostly consists of subprime borrowing, and pure players are yet to demonstrate profitability.
Iulia Ciutina | April 27, 2022
Online Lenders

Deserve’s CEO on the fintech’s new corporate credit card as a service offering

  • White label commercial credit is blooming, aiming to help companies serve other businesses by giving them easy access to capital. In our latest briefing, we spoke with Deserve's CEO Kalpesh Kapadia on the fintech's new commercial platform.
  • In other developments, community banks are partnering with crypto lenders - selling loans to a crypto trust and converting the cryptocurrency in fiat dollars to continue writing more loans.
Iulia Ciutina | April 18, 2022
Online Lenders

This week in lending: 2021 BNPL results, credit markets poised for growth this year

  • US BNPL players are pursuing aggressive growth strategies, but underlying performances are beginning to surface some concerns in the market.
  • After the pandemic made lenders cautious, credit markets have opened again in 2021, thanks to positive economic signs from borrowers.
Iulia Ciutina | March 18, 2022
Member Exclusive, Online Lenders

Lending Briefing: 2021 BNPL results, C&I lending picking up again

  • US BNPL players are pursuing aggressive growth strategies, but doesn’t necessarily mean healthy growth - underlying performances are beginning to surface some concerns in the market.
  • In commercial and industrial lending, volumes are picking up for the third consecutive quarter since the onset of the pandemic.
Iulia Ciutina | March 16, 2022
More Articles