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.

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.