Every day is enough to pay, according to KOHO

The financial technology Toronto’s ambition is to “make every day a payday” by giving users access to a portion of their payroll at any time.

Karim Benessaieh

Karim Benessaieh

Getting paid every day instead of every two weeks? The show looks too good to be true. But with some nuances, it is already known in the US and UK that financial technology Toronto-based KOHO wants to promote in Canada.

Felix Wu, Chief Financial Officer, said in an interview: “KOHO makes every day a payday. Employees are allowed to get paid in advance on demand, up to 50% of what they earned daily if they so desire.”

Photo courtesy of KOHO

Felix Wu, Chief Financial Officer of KOHO

KOHO’s largest client, Ameego, manages the schedules and payroll of approximately 75,000 restaurant workers for chains such as Tim Hortons and Boston Pizza. OSL, which has been providing the DailyPay service used exclusively by McDonald’s and T-Mobile in the US since April 2020, has also chosen KOHO to expand this formula to Canada. It was shown for four weeks.

From one check to another

According to Wu, 85% of OSL’s 7,500 employees in the United States have at one time or another benefited from this “instant salary,” which is completely free for employer management. He believes the reception will also be enthusiastic in Canada.

This “immediate payment” is actually an advance on the payday. Every day, employers or HR managers like Ameego send KOHO files detailing the hours worked and the salary owed to each employee. Then anyone can go to the KOHO site and ask for 50% of the accumulated salary. The KOHO then withdraws its entitlement when the payroll is filed, usually every two weeks.

Photo courtesy of KOHO

If the employee agrees to wait for the money to be paid to him the next day in his KOHO account, he does not pay a penny.

If he agrees to wait for this money to be paid to him the next day in his KOHO account, the employee does not pay a penny. If he wants that money on the same day, the advance will cost him $2 if it is entered into his KOHO account or $3.50 if it is put into his personal account.

Founded seven years ago, KOHO isn’t exactly a bank: it’s already partnered with a Canadian institution with a charter bank, Peoples Trust, and transactions are done from a Visa prepaid card. Rechargeable.

KOHO, which has a workforce of just over 200 employees, claims to have 375,000 members in Canada, including 48,000 in Quebec. In particular, it offers an interest rate of 1.2% on balances, with no monthly fees on its accounts, as well as a credit improvement tool. It is valued at approximately $300 million, and its major shareholders are Power Corporation (through its venture capital division Portage), Drive Capital, TTV Capital, and National Bank.

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Absence and motivation

When it comes to instant payroll, Wu doesn’t expect that most employees who have access to it pull 50% of their paycheck each day. He also admits that it is not a very effective way to budget and, of course, to get out of a tight financial situation in the long run.

It is a solution for people who have problem with timing ; Then it is excellent. Otherwise, these people may find themselves applying for loans with huge interest rates. But this is not a solution if you are not making enough money.

Felix Wu, Chief Financial Officer of KOHO

KOHO’s Chief Financial Officer believes that this is a good way for the employer to attract candidates, counteract absenteeism, and motivate employees.

“When companies offer that, you see less absenteeism and better retention. Employees’ financial concerns have an impact on their day-to-day work, on their mental health.”

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