Dive Brief:
- DailyPay, the New York City-based early wage access provider, has received $160 million in lending through a new revolving credit facility from Barclays bank and hedge fund firm Angelo Gordon, plus a $100 million term loan from the venture capital firm SVB Capital and investment company Neuberger Berman, according to a Tuesday press release.
- The $260 million in financing will enable DailyPay to provide its early wage access services to keep growing domestically, expand internationally and pursue innovation, the company said. Its clients include Hilton, Target, Kroger and Dollar Tree.
- The move follows the appointment of Kevin Coop as DailyPay CEO five months ago. The company noted that it has brought on more early wage access clients under his leadership.
Dive Insight:
The capital infusion builds on DailyPay’s prior debt financing as it continues to expand its on-demand pay business. Such services tend to be used particularly by gig workers and other minimum wage employees.
DailyPay previously received $300 million in a revolving credit facility from Barclays last March. Alongside other payments firms that raised capital in 2021, the company secured $500 million in equity and credit capital from Carrick Capital Partners and other contributors, per a May 2021 announcement.
“Our opportunity lies in capturing more of the market,” Coop said in the release. “Our track record of trust and investment from the world’s leading financial institutions validates our business model and path forward. This latest funding further propels us to a position of strength.”
Still, the company faces a crowded field of competitors, including including Payactiv, Even Responsible Finance, Flexwage Solutions and EarnIn, to name a few. By some estimates, there are as many as 30 players in the burgeoning market.
In addition to naming a new CEO, the company also named Mike McKeon as senior vice president of channel and partnership strategy last August. Bringing experience at other companies like the payroll company ADP and tech provider UKG, McKeon is now responsible for maintaining the company’s current partnerships and building new channels in the U.S. and abroad, per a company press release.
DailyPay has added new customers and services to its lineup over the past year. Last April, the company announced that Coborn’s, a grocery retailer, had begun using DailyPay’s early wage access service for its employees.
In January 2022, the company introduced a digital wallet to let workers manage their finances. Later that year, the company teamed up with Visa to provide employees with a prepaid debit card to get early access to their wages.
Though early wage access providers say their services assist low-wage workers, such companies increasingly face scrutiny from advocacy groups and regulators. A coalition of advocacy groups, including the NAACP, the Center for Responsible Lending and the National Consumer Law Center, called upon the Consumer Financial Protection Bureau to undo the regulatory actions that permitted these companies to charge fees for their on-demand pay services.
