Hampshire-based pay provider CloudPay raised a $58 million (£42.5 million) round of capital last week, led by the Olayan Group, along with existing investors Pinnacle Investment Partners, Rho Capital Partners and others.
According to Crunchbase, CloudPay has raised a total of $175.5 million (£128.8 million) in funding over seven rounds to date.
The payroll and payment services company was vague on what the funds will be used for, simply stating they will support CloudPay’s “continued growth”. Although CloudPay CEO Paul Bartlett did mention “peer-to-peer payment capabilities” as an area of interest. Based on LinkedIn data, CloudPay has seen its headcount increase by 15% over the last six months, so it is making progress.
The funding round follows on from last year, which was pretty good according to CloudPay. The firm says it exceeded its pre-COVID new business plan growth by 50%. CloudPay attributed much of its 2020 results to new customers, having expanded its “new customer wins” by 35% in a single year.
In July, CloudPay announced its CloudPay NOW earned wage access offering. This enables organisations to offer earned wage access in advance of payday. It was field-tested last month across 12 countries by an unnamed lifestyle brand, and is now live in those nations with that mysterious brand.
Industry analyst Josh Bersin comments: “On-demand pay – also known as earned wage access – enables workers to tap into their own pay balance as early as the day it is earned. In direct contrast to existing credit card debt, personal and payday loans that charge steep fees, this real-time pay system reduces financial stress for employees.”
CloudPay NOW is integrated with CloudPay’s payroll and treasury solutions, allowing it to deploy this product across 130+ countries.
According to the firm, over 1,500 companies use its services. Names listed on its site include Visa, Refinitv, S&P Global, Intuit and Groupon.
CloudPay was founded in 1996. Along with the UK, it has offices in the US, Singapore, Spain, Italy, Costa Rica, France, Hungary, China and the Philippines.
On-Demand Pay Across the UK
The concept of on-demand pay has caught on in the UK and CloudPay has several competitors.
Last week, fintech firm Revolut unveiled its new feature ‘Payday’. The company explains that users can unlock a portion of their earned pay on-demand – and a “small flat fee may apply”.
The Access Group is based in Loughborough, Leicestershire, and offers EarlyAccess. The company states that employers using Access EarlyPay have seen a 22% increase in employee productivity and a 25% reduction in staff turnover.
Orka Pay is new on the scene and was founded last year in Manchester. Hastee in London was established in 2017 and its customers include PayPal and London City Airport.
Also in London, charity-backed app Wagestream powered up in 2018. It has some notable clients mentioned on its website – Bupa, Co-op and Halfords.
Wagestream cites various stats from PwC’s 8th annual Employee Financial Wellness Survey to support the theory of on-demand pay. For example, 48% of people are distracted at work by money worries and 78% are more likely to leave for another organisation who cares more about their financial wellbeing.
In addition, EY’s research on ‘payday pressure’ delves into the main use case for on-demand pay. Its report from September 2020 surveyed around 4,000 individuals across the UK and US.
EY explains that 70% of individuals in the UK and US experience financial stress regularly. Half of these individuals have faced a financial shortfall between pay periods and encounter this issue approximately every four months. The negative impacts for individuals are considerable: nearly 75% of those who have experienced financial difficulties have reported material deterioration in their health and wellbeing. It adds that 20% of employee turnover is attributable to financial stress and EY estimates the combined effect of this to cost employers in the US and the UK is about $300 billion (£220 billion) annually.