Revolut looking to roll out new ‘salary advance’ product locally

Revolut is intending to roll out a new product in its app in the Republic that allows employees to access some of their wages as they earn them, rather than wait until payday.

The Payday product, which was launched in Britain on Thursday, will be integrated into the fintech’s app and will give employees more control and flexibility over their finances. It also won’t cost anything for employers.

Wagestream, another British fintech start-up whose backers include tech titans Jeff Bezos and Mark Zuckerberg, rolled out a similar "get-paid-as-you-go" platform in the Republic a few years ago to counter what it called the "payday poverty cycle".

Revolut, which has 16 million customers globally, including more than 1.5 million in the State, said its new product will plug into an employer’s payroll system, allowing employees to draw down part of their wages earlier in the month for a small, flat fee.

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Using the solution, customers will be able to view their available accrued earnings and select the amount they want to withdraw directly into their main account, enabling them to instantly access their salaries earlier in the month to cover expenses or necessary costs and avoid getting into debt.

Payday launched in Britain on Thursday with the company confirming it intends to make it available to customers here and elsewhere in the European Union. The Daily Telegraph reported the service would cost £1.50 every time a user drew on their salary.

Some in Britain have raised concerns about how such structures are regulated, with the UK’s Financial Conduct Authority among those highlighting potential issues such as dependency. Revolut has said it is mindful of such issues.

Financial regulator the Central Bank of Ireland does not supervise Revolut, which operates here under EU passporting rules for lenders, so was unable to comment on the matter.

Credit score

Revolut said Payday has no impact on an employee’s credit score and will provide customers with a lower cost alternative to using credit cards or payday loans.

Responding to the Revolut move, Dermott Jewell, Consumers’ Association of Ireland policy and council adviser, suggested workers who face cash difficulties in managing their finances seek advice on the product if they are considering signing up.

"We believe in the importance of making financial wellbeing accessible to all, and this includes focusing on the impact of financial stability on employees' mental health," said Revolut chief executive Nik Storonsky.

“After the difficulties of the past year, the last thing employees need now is financial uncertainty and stress. It is important to move away from a situation where many are dependent on payday loans and expensive short-term credit, a reliance that is exacerbated by the monthly pay cycle,” he added.

Revolut was last month valued at $33 billion after raising $800 million from backers. The company is best known for consumer-orientated services. However, it has also been pushing deeper into business banking more recently.