‘Pay in advance’ fintech Paylab enters voluntary administration with trading future up in the air

Australian employee engagement fintech Paylab has entered voluntary administration, raising questions about its future and the status of workers using its pay-in-advance feature.

Documents shared by the Australian Securities and Investments Commission show Bruce Gleeson and Daniel Robert Soire, both of Jones Partners Insolvency & Restructuring, were appointed as joint administrators on Friday.

A first meeting of creditors will be held on July 26.

Originally founded as Wagesplitter, the Paylab platform promises businesses increased employee engagement through brand savings deals and early access to accrued wages.

The Paylab ‘gold’ tier allows workers to earn rewards with brands including Woolworths, Harvey Norman, Bunnings Warehouse, and Uber Eats, which accumulate each time an employee shops through the Paylab app.

Paylab earns a commission from the retailer each time a sale is processed through its app.

Its ‘platinum’ tier goes a step further, allowing workers at participating businesses to instantly access a portion of their earned wages ahead of payday.

Paylab automatically recoups those pay advances come payday by integrating with a business’ payroll system, and takes a service fee worth 2.5% of the pay used in advance.

“It sounds too good to be true – without Paylab it would be!” the Paylab website states.

Speaking to SmartCompany on Wednesday, joint administrator Bruce Gleeson confirmed the platform’s voluntary administration.

While the administrators intend to carry on operations, its long-term fate, and the way employees will be allowed to access those brand bonuses and pay-in-advance features, is uncertain.

“We are presently trading the Company, however, such trading is being assessed on an ongoing basis,” Gleeson said.

The joint administrators are currently eyeing a sale of the company, or a recapitalisation through a Deed of Company Arrangement.

PayLab one of several fintechs offering pay-in-advance

Paylab emerged in a growing market for pay-in-advance platforms, which promised to combine the core functionality of existing pay advance services with the slick, app-based interfaces of fintechs like Afterpay.

Critically, unlike traditional payday lenders, platforms like Paylab do not charge interest, but service fees are set as a proportion of the overall amount handed out in advance.

Competitors in the space include Beforepay, and Nine25, which initially promised eligible employees to realise their earned income on an hour-by-hour basis.

Fintechs in the space were initially billed as a powerful tool to foster employee engagement and retention through prolonged labour shortages.

A shifting macroeconomic environment has changed that equation.

Although unemployment remains very low, job vacancies declined by 2% from February to May, and the number of job ads is declining from record highs, suggesting the feverish fight for talent is slowly cooling.

SmartCompany has approached Jones Partners Insolvency & Restructuring for further comment.