Riding the Gig Economy Bull

...from Earned Wage Access to Frictionless Hiring

Earned Wage Access (EWA) has been one of the more exciting, high social impact potential corners of the fintech world. Imagine – instead of someone forced to get a predatory, super high interest payday loan – they simply tap into the wages that they have already earned.

As we look back at the Summer however, EWA suffered a significant blow. The Consumer Financial Protection Bureau decided that these accessed funds are in fact loans, and therefore subject to the Truth in Lending Act. This means that the current fee structure must become more transparent, and more prohibitively, streamlined to loan industry standards.

Has this change decimated the EWA industry? Well, I was lucky enough to get the inside scoop from Mo Saeed, who founded OrbisPay, an EWA venture.  He says that smaller companies will no longer be able to survive, but that larger companies with diversified business activities will. Large payroll companies will have their own internal earned wage access product, as ADP has already.

Just a few months before this change in law was announced, Mo decided to move on from OrbisPay and started working on a new venture. He has inspired me with the strength of his market acuity, his ability to adapt, and to know when it’s time to swallow one’s pride and reroll the dice. Color me impressed.

In his own words, he “saw the writing on the wall” and knew that it was a matter of time until regulations made EWA more difficult. He shares that the government did not just wake up yesterday and make this decision, but have been looking at it for more than three years.

I asked him why the government came down on this – I was personally attracted to this model as it seemed a great alternative to payday loans. He shared the devil in the details – with the average advance of only $50, $3-5 flat fee per transaction was too high a fee as a percentage of the transaction. When you access earned wages multiple times, fees start to add up and look more like payday loans.

This specific EWA business model is not viable, according to Mo. It’s also not a good look - users are accessing their own money, already earned, so it’s less friendly to make money on it.

Furthermore, he understood that EWA is not sustainable unless you scale very heavily. He believes that the best case scenario is an adoption rate of 10%, while 30-40% is what was necessary for his business to succeed. After all, the business needs access to a credit line to advance the money, and transaction fees need to cover that interest rate plus a profit.

There is a way forward for companies with deep enough pockets and diversified services, and that is attaching EWA to debit cards. EWA can be subsidized with debit cards attached to the accounts, and then consumers can take advantage of an EWA program for free if using the debit card. However, to make money on interchange fees you need a very large scale, and an independent venture will struggle to cover these costs.

Mo has proven a remarkable ability to pragmatically decide how to move forward when the market forces are working contrary to a personal work ethic driving you to never give up. He is the master of redefining the game in moments like these. He shares, “When you hit a wall, do you keep digging or go around?”

The Pivot 
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In Mo’s case, working for so long on EWA gave him a unique vantage point to intimately understand the bigger problems in the ever-increasing gig economy. And he’s ready to take serious action, founded in technical skill, visionary leadership, and an in-depth understanding of the financial needs of gig workers.

The need is growing exponentially on a multivariate basis. Not only are the number of gig workers increasing, AI is dismantling standard jobs. People are under more pressure to fend for themselves in an increasingly fragmented, disjointed track to “making a living.” He wants to make it easier to not drown in this new world, but to thrive.

Just this August, Mo announced his new venture, Scan and Hire, which reduces the time and financial cost of matching workers to jobs, for both worker and workplace.  The speed of matching talent is currently a huge issue, with background checks, biometrics, and credentialing eating up weeks in an already high-turnover environment.

With Scan and Hire’s job passport with QR code, Mo shares that the time to hire is reduced from an average of two weeks to an hour, and the cost from $4,000 to $79.  

Scan and Hire is frictionless, paperless hiring. Keep your eye on Mo, he’s riding the gig economy bull and shows no signs of falling off.