London-based SteadyPay, a payment solutions lender for workers with fluctuating income (contractors, temp workers, and shift workers), says it is not only helping its subscribers with salary “top-ups” but building their creditworthiness in the process.
SteadyPay CEO and co-founder John Downie, who had spent most of his career building tech solutions for banks, wanted to create lending solutions for workers with irregular income. That’s why they have come up with a “top-up” solution.
The company was established back in 2018 and works by topping up a user’s bank account when their earnings fall below their monthly average. Users pay a monthly fee of £4 per week, or just over $5 a month, for the service. They can repay the top-ups interest-free, and only owe repayments back to SteadyPay when they make above their average income in a given month, Downie told TechCrunch in an interview.
The company has over 9,000 active users on the platform across a variety of industries, most of whom are between 22 and 40 years old, Downie said.
How much does the SteadyPay membership cost?
The subscription is £4 a week and gives access to pay top-ups, early top-ups, and credit building services. No interest is ever charged.
Subscribers to their service can accept a salary top-up offer should they get paid below their average pay by £25 or more. If a subscriber accepts the offer, the lender will draw down credit from their top-up facility and advance it to a subscriber’s bank account.
- Learn more about subscriptions here.
However, the following fees based on the credit agreement could be charged:
- If SteadyPay have to register that you defaulted, there is a £12 fee
- If SteadyPay has to file a county court judgment against you, there is a £24 fee
- If SteadyPay has to administer a disputed transaction by you, they will pass on the fee set by the third-party (typically your bank or debit card provider). This fee can be up to £30 and is applicable for each individual transaction that is disputed or flagged as fraudulent.
Subscribers must wait up to 24 hours after they have been paid for the app to update and send a top-up notification. It is learning to detect your pay, says the company.
Important information:
- To activate top-ups you must have paid your subscription for two weeks.
- All top-ups are subject to affordability checks.
- Your top-up facility has a £1000 credit limit.
- If we are unable to collect a subscription or instalment payment, the service will put a hold on your top-ups.
- If you have been granted a holiday on paying your instalments, the service will not offer you a top-up during this period.
- SteadyPay does not offer top-ups for payroll deductions such as court fines, tax payments and employer reimbursements. They offer top-ups for when your pay is below average due to working less than usual, like when you have fewer shifts, take time off sick and go on holiday.
Top-ups are not offered retroactive after the two-week cooldown period. You’ll be eligible for a top-up for a wage received after this time.
How can the service build your credit rating?
The company claims that when you make a repayment you’re not only refreshing your credit for the next top-up, you’re also building your credit score.
“We partner with credit agencies to report on repayments. Credit agencies use the reports to update your credit score. This is important because banks, lenders and even retailers refer to this when you apply for a credit card, loan or store finance.”
SteadyPay automatically collects repayments from your debit card. You can also make early repayments on the SteadyPay app.
How could mortgage underwriters look at this salary boost tool?
John Yerou, Managing Director of Freelancer Financials, a mortgage broker specialising in mortgages for independent workers, including freelancers and contractors, says a product such as SteadyPay could be seen as “controversial” among mortgage underwriters.
He explains why:
Personally, I would not recommend this to freelancers in order to improve their prospects of getting a mortgage loan or credit rating.
Attempting to normalise the fluctuation (irregular payments) in earnings by utilising a third-party service for the purposes of seeking a mortgage loan won’t wash with lending institutions. They may even perceive it as committing fraud by manipulating the representation of your earnings.
Its misrepresentation of one’s earnings pure and simple. Even if it was approved by the regulator (FCA), which I doubt, the lenders would have problems with this.
Is the business financially sound?
SteadyPay reported this month that it has raised $5 million for its Series A round led by European venture capital firm Digital Horizon. The investor is already familiar with the space having invested in a freelancer credit product called Oxygen, based out of San Francisco. Freelancer finance has come into its own, especially in the US in recent years with Oxygen was reportedly in talks to raise a $70 million round at a $500 million-plus valuation late last year.
The company’s co-founder and CFO is Oleg Mukhanov, a Russian born former UBS investment banker turned angel and VC investor. You can read his back story here.
John Downie said about the investment:
“This investment allows us to create financial stability for 100s of thousands more customers in the UK. We will offer more products to eliminate financial stress for our customers and partners.”