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Changing the way we're paid: Earnd's story

Earnd began when co-founder and CEO Josh Vernon saw a problem and also a potential solution.

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Earnd began when co-founder and CEO Josh Vernon saw a problem.

“A friend of mine found himself in a very tough spot due to debt,” Josh says.

Josh’s friend had moved to Australia and needed money to help set himself up – about $300 in total.

“He had no credit history, so the only money he could borrow was from a payday lender. He soon found himself taking on more loans to pay the first one off.”

“I thought that wasn’t right. He’d only needed $300.”

Josh was working at a venture capital fund at the time, where he saw 20 companies through the office doors each week. His job was to run the initial checks of each company and consider how much impact the businesses could have. 

“One idea that really interested me was from an overseas business. Essentially, their solution let employees choose which day they got paid, to help them better manage cash flow.”

A solution to help people manage their money 

Josh began to think about the impact access to on-demand pay could have on an individual’s finances, particularly when you consider that 70% of workers are stressed about money and half of those people fall short on expenses between pay periods.

“In our society, people are penalised – with fees, charges and high interest rates – because they don’t have access to money that is actually theirs,” Josh says. “So, one big bill can derail someone’s budget simply because they don’t have the cash in their account at that time.”

“This idea of changing pay to give people on-demand access to it; in much the same way that Uber, Netflix and Airbnb changed how people access transport, entertainment and accommodation, began to sound like a no-brainer to me.” 

Josh partnered with Serge Kotlyarov, who brought start-up experience and technical skills as a previous founder, developer, consultant and start-up technology advisor, to create Earnd in April 2018.

 

Turning an idea into reality

The Earnd app connects to payroll systems to let employees access a portion of their pay as they earn it and at no cost to them. Fast payment technology means employees receive any money they withdraw through the app instantly. And money withdrawn is deducted from the employee’s pay cheque in the same way deductions like annual leave are processed by payroll.

Access to on-demand pay gives employees freedom to choose how and when they’re paid, so they can fit their pay with their life rather than having to rely on an employer’s pay cycle.

“When an employer puts a solution like Earnd in place, they recognise their employees’ expenses don’t fall on a 14-day or a 31-day basis,” Josh says.

“Employers are able to support their employees by giving them the choice to access to their income on the same schedule as their expenses come. At its core, Earnd gives you the flexibility or the freedom to align how you receive your earned income with the way you live your life.”

 

Making finance fairer through smart technology

By February 2019, Josh and his small team of 7 had raised $2.5 million in funding from some of the biggest names in finance – including NAB Ventures.

A year later, Earnd had 20 businesses offering Earnd to a group of 10,000 employees. These included hotel operator Adina, retailers Best and Less and Glue and fintech Tyro. 

 

The importance of tying work and reward together

Fortnightly and monthly pay cycles have only been around since changes in payroll technology in the 1960s, Josh points out, “We actually were paid daily for thousands of years.

“Through what we’re doing at Earnd, we’re tying work and reward together. We give people access to what is rightfully theirs, so they can make more choices with their money.” 

“Working with a great team is a huge part of what keeps me motivated. Enabling employers to reduce financial stress for their people is incredibly motivating too," Josh says.

"The number one cause of relationship breakdown is financial stress and the biggest reason people fall into depression and anxiety is financial stress. This is an underserved challenge and we can take huge cognitive load off of people by giving them financial control.

“Then I think it’s the ridiculous nature of how the current pay system works that drives me. I think it’s really unfair that people are held to these completely arbitrary pay cycles. The ability to impart change on how the world gets paid is an incredibly exciting thing to do.”

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