Enabling 24/7 earned wage access for South African employees with Jem

Today, 76% of South African salaried workers run out of money before their next payday. They also lack access to forms of responsible credit that can help them make ends meet. As a result, many turn to solutions like loan sharks or payday lenders, where they’re faced with astronomical interest rates. These workers end up spending upwards of 65% of their take home salary paying off existing debt, impacting their ability to cover basic costs like transport to work, or grocery and medical bills.

This further perpetuates the ongoing debt cycle in South Africa, where nearly one in every six South Africans are behind on their debt repayments. As of September 2023, household debt accounted for 40.6 % of the country's Nominal GDP.

Earned Wage Access (EWA), also known as on demand pay in markets like the US, is a hybrid fintech-HR innovation that has been growing in popularity as a helpful solution to this issue. According to a report from J.P. Morgan, this industry has risen in response to the emergence of “a real-time, on-demand, connected commerce ecosystem” that exists despite the fact that many consumers are still compensated in deferred, fixed-payroll cycles. “For segments of the population that do not have substantial savings, this is leading to intra-month cash flow challenges at a time when the cost of living is rising faster than real wages.”

Many employees turn to their employers to request a portion of their upcoming salary in advance, as a safer alternative to payday lenders. At high volumes and frequencies, however, this can add significant administrative and financial burden for employers who need to manage this process for their employees. It also leads to potential stigma around employees that need to go to their managers or HR teams individually to request a wage advance.

​​Originally launched in 2019 as SmartWage, Jem HR is a fast-growing, South Africa-based tech firm dedicated to building a path to simpler, faster, better HR for frontline employees. Jem uses WhatsApp to digitise some of the most time-consuming, tedious and costly HR and payroll processes and helps employers deliver a consistent employee experience to all staff.

Today, Jem offers a simple and effective EWA solution for businesses, and goes much further to support teams with other tasks including payslips and IRP5 forms, employer-employee communication and more.

Jem chose Stitch as their payments partner to enable instant, 24/7 earned wage access for the employees they serve. We spoke with Jem Product Manager Sinta Reynolds, and Co-founder and Chief Product Officer Caroline van der Merwe, to learn more about Jem and how Stitch has helped them improve financial outcomes for their clients.

Revolutionising Earned Wage Access and employee management in South Africa

​​​​Jem’s EWA product allows businesses to give employees access to a portion of their earned-but-unpaid salary/wages before payday. It’s a non-credit alternative to help employees cover financial emergencies without falling into a debt trap. “There are a lot of companies that offer employees loans, but don’t offer a way for them to get out of the debt cycle,” Sinta said. “EWA is a more responsible financial lifeline. For many Jem clients, EWA has replaced the traditional salary advance and staff loan, which is a major time-sink for many HR/payroll teams.”

Jem has given some clients up to 15% of their work time back, as a result of not having to process salary advance/staff loan requests themselves. They also encourage responsible financial practices by offering a financial education element within the platform. This contains mini-courses in the form of audio files sent to the employees, followed by a set of questions.

“We work with many lower income employees, who often struggle to get through the month. If they need the money, they really need it,” Sinta said. “A lot of employees we spoke to would borrow from friends, family, or loan sharks with high interest rates, because they didn’t have access to their earned wages.”

When it comes to technology and communications, WhatsApp remains a critical tool and the best way to reach these employees. This presented an opportunity for the team to leverage a platform people are already comfortable using in their day-to-day lives. Rather than reinventing the wheel, Jem decided to build all of their solutions using WhatsApp technology. “Utilizing WhatsApp, we leverage a platform our customers use daily, removing the necessity for extra app downloads or the need for additional tech expertise when using the Jem product,” Sinta said.

To access their earned wages in advance, employees can simply message the Jem chatbot on WhatsApp, choose a payment option, and confirm their transaction. Not only does this enable fast and easy access, it also eliminates barriers like the need to speak with someone from their HR team before requesting their money. Through Jem, if an employee requests an instant advance, it appears in their bank account in 90 minutes.

According to Sinta, Stitch has been an integral part of Jem’s success. Stitch enabled Jem to deliver a secure and seamless user experience for their EWA product and enable faster access to earned wages, when it’s needed. This translates to significant cost savings in fees and interest for the employees that rely on EWA to make ends meet.

In the past year alone, Stitch has helped Jem support employees in saving around R45 million in credit fees and interest. The average withdrawal amount would have accrued interest and fees of around R147.08 if borrowed from a payday lender. But with Jem, employees paid R18.46 on average instead. Equally important, Stitch now enables Jem to process EWA payments 24/7 - ensuring that employees are able to access their money when they need it most.

“We’re building a truly modern platform to manage frontline workers, and to do that we need best-in-class tools. Partnering with Stitch has enabled us to bring speedy payments to our customers, using the most modern payments technology in South Africa.” - Caroline van der Merwe, Jem co-Founder and Chief Product Officer managing the Jem-Stitch partnership

Today, with Stitch as their payments partner, Jem is able to offer a fuller suite of products that make HR delivery to frontline workers faster, simpler and cheaper for employers. "Our journey with Stitch has truly been exceptional,” said Sinta. “Their team's responsiveness is remarkable, and we've cultivated a strong and enduring relationship. It's invaluable to work with a partner who not only comprehends the intricacies of our challenges within our distinctive context but also demonstrates a keen understanding of our priorities. We've eagerly volunteered to test-drive some of Stitch's innovative products, and we're always enthusiastic about sharing the insights we gain from consumer feedback and more. This personalized approach sets Stitch apart from other, more corporate payments service providers."

Recently, the Jem team successfully launched 24/7 RTC payouts with Stitch, granting all users access to advances at any hour, 365 days a year. Sinta noted, "This has led to a significant surge in utilization, particularly during evenings and early mornings. It holds immense significance for employees such as security personnel who undergo shift changes and require immediate access to their earnings. It is indeed a transformational milestone," Sinta said.

Beyond Earned Wage Access

Businesses with high volumes of frontline employees also face additional administrative burden when it comes to tasks like effectively communicating important information to their staff, dealing with regular paperwork and forms and managing payroll.

Today, the Jem team supports businesses with much more than EWA. They have a payslips solution that enables employers to send payslips and IRP5 forms to employees via WhatsApp rather than printing these forms to distribute them manually. “Our clients can have anywhere from 100-10 000 staff they need to hand forms to. Now they can simply upload them on the Jem dashboard and distribute them digitally over WhatsApp,” Sinta said.

With Jem, employers are able to get these documents - which are a matter of labour law compliance - to employees on time and at a fraction of the cost vs printing and physical distribution. Jem’s Payslip and IRP5 product has saved one of its clients in the facilities management sector R6 million annually.

The team also supports clients with effective communication between central management and their staff. This is a notoriously difficult challenge in businesses with a distributed workforce that aren’t desk-based, and they often face delays in messages reaching people, inconsistency in messaging and more. With Jem, employers can broadcast a message to their entire workforce at the same time via WhatsApp. They’re also able to track whether this communication reached employees successfully, resulting in an improved company culture and reduced employee turnover.

In terms of what’s next, the team is focused on building out more solutions that can help with additional HR challenges. They’ve identified a number of activities in admin and communications that are ripe for tech innovation and are dedicated to working toward improving all aspects of employer-employee relationships for the businesses they serve.

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