We’ve got an exciting financial tale to share with you, one that’s all about empowerment and making ends meet. Imagine a world where waiting for payday is a thing of the past, where your hard-earned money is at your fingertips when you need it most. That’s precisely what ZayZoon, the fintech pioneer, is all about.
ZayZoon, a company that started by charging a modest $5 fee to give workers access to their earnings ahead of payday, has just hit the jackpot with a fresh injection of $34.5 million in Series B funding. Co-led by Framework and EDC, with a nod from ATB Financial, this financial boost brings ZayZoon’s total funding to a whopping $75 million!
Empowering Workers with Financial Freedom
Now, let’s dig into what makes ZayZoon tick and why it matters. Picture this: you’re a hardworking individual facing a financial squeeze before payday. Bills are piling up, and you need cash now. ZayZoon’s got your back. CEO Dary Tuer, the driving force behind this mission, shares his vision of saving 10 million employees a staggering 10 billion dollars.
But it’s not just about the numbers; it’s about people. Tuer’s passionate about helping folks who are struggling to make ends meet. At the same time, he recognizes the challenges that small- and mid-sized businesses face in attracting talent while dealing with their own financial hurdles. ZayZoon acts as a lifeline for both employees and employers, keeping them away from predatory loans and those pesky bank fees.
A Beacon for Businesses in a Competitive Landscape
Let’s dive into the heart of this venture. ZayZoon was brought to life in 2014 by Dary Tuer, Tate Hackert, and Jamie Ha, with a shared goal of revolutionizing the way we access our earnings. It’s a tale of friendship and entrepreneurship.
Hackert, a teenager at the time, had a bright idea. After earning some cash working on a commercial fishing rig, he lent money through online platforms like Craigslist and Kijiji to help fellow employees bridge the gap between paychecks. Fast forward nearly a decade, and ZayZoon is now one of the fastest-growing apps of its kind, with over 10,000 business customers across the U.S. and partnerships with more than 160 payroll providers.
So, what’s the secret sauce? ZayZoon gives employees the power to access their hard-earned wages whenever they need them, no more counting the days until payday. It’s about empowerment, making sure workers steer clear of payday loans and those annoying bank fees.
The Fintech Landscape and Regulatory Ripples
Now, let’s address the elephant in the room. ZayZoon operates in a realm known as earned wage access (EWA), where the concept is pretty straightforward. For a nominal fee, $5 in ZayZoon’s case, employees can request a slice of their regular paycheck before the official payday arrives. You can take out as little as $20 or as much as $200 each pay period.
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But, as with any financial innovation, there are nuances. Some groups argue that EWA programs like ZayZoon’s should be classified as loans under the U.S. Truth in Lending Act, ensuring safeguards and transparency. While ZayZoon doesn’t legally require repayment and won’t take action to collect payments, it does make automatic withdrawals, potentially pushing users into overdraft and effectively charging interest through fees.
There’s also a no-fee payout option, but it comes with a twist. Employees opting for this choice receive their funds in the form of gift cards for retail giants like CVS and Target. They also agree to share some personal information for advertising purposes. While users can request data deletion, an in-app mechanism to simplify this process is still on the to-do list.
But why all the fuss about a $5 fee? Well, every penny counts, especially for low-income workers. Studies have shown that even a $100 reduction in savings can lead families down the rabbit hole of predatory lending and missed utility payments. Shockingly, about one in five American families has less than two weeks’ worth of liquid savings.
A Regulatory Balancing Act
Now, onto the debate about whether EWA programs genuinely benefit businesses. Companies like ZayZoon, along with rivals Refyne, Branch, DailyPay, and Even, have marketed themselves as retention tools. They aim to keep employees satisfied by offering early wage access. However, the results are mixed. Take Walmart as an example. The retail giant initially thought providing employees with early wage access would boost retention, but it found that employees using the service tended to leave their jobs faster.
Nonetheless, EWA usage is on the rise. In 2020, workers accessed a whopping $9.5 billion through EWA apps, up from $6.3 billion in 2019 and $3.2 billion in 2018. As these services become increasingly popular, especially among those with lower credit scores, regulators are starting to take notice.
Nevada took the first step in June, enacting a law to audit and examine early wage access providers. The following month, Missouri passed a law requiring EWA companies to register with the state, pay a $1,000 registration fee, and retain payment records for a minimum of two years.
But ZayZoon, a significant player in the EWA game with 102 employees, isn’t slowing down. Tuer emphasizes that they’re in constant dialogue with the investment community, seizing opportunities to strengthen their financial position. Their goal? Cement ZayZoon’s status as a category leader, ensuring that this human-centric fintech continues to empower workers and businesses alike.
The tale of ZayZoon, a fintech champion on a mission to make a real difference in the lives of employees and businesses across the nation. With $34.5 million in their war chest, they’re poised for even greater impact. Stay tuned as we watch this inspiring journey unfold!