Instant Pay Venture Raises $4.5m

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Instant Pay Venture Raises $4.5m

10/15/2020

Clair, an early stage fintech startup based in New York City, wants America’s 82 million hourly workers and 57 million gig workers to get paid as quickly as Uber pays their drivers today: instantly. Today, Clair announced a $4.5 million seed round led by Upfront Ventures, with participation from Founder Collective and Walkabout Ventures. Former Venmo COO Michael Vaughan and Seamless Founder Paul Appelbaum also participated in the round.

Shortening the Pay Cycle

With the surge in unemployment brought about by the pandemic, nearly 40% of Americans said they would struggle to cover an unexpected $250 expense. In the face of an emergency, they often need to take out high-interest payday loans that trap them in a debt cycle. In response, several payroll providers and time and attendance providers announced instant payment features that would give workers the option to get paid daily. Clair is betting that these are the early signs of a coming wave that will significantly shorten the standard two-week pay cycle.

By offering instant payment services to gig platforms in addition to traditional workforce management systems, Clair hopes to help them win over and retain new freelancers. A 2019 report showed that 65% of skilled gig workers would consider switching to a platform that paid faster, while 85% said they would work more often if they were paid faster.

Clair says there are more payday lenders than McDonald’s in the US that charge on average more than 300% annual interest on loans. 

Clair embeds its financial services within workforce management, payroll and gig platforms. Workers who choose Clair as their direct deposit account are able to get free advances on a portion of their earned wages, which they can access using their Clair debit card. Advances are then deducted from their account during the next payday. Clair generates revenue via debit card interchange fees paid by the merchant where these cards are accepted.

78% of Americans still living paycheck-to-paycheck. Beyond wage advances and banking, Clair also wants to be a financial partner for their users. Today, Clair users are also able to set automatic reminders to put money aside, but the company has several more savings features in their pipeline.