In this period of inflation, nudges multiply, whether from the government or companies. Some start-ups also want to play a role on their own scale. This is the case with salary installment applications that allow an employee to recover part of their salary from the 15th of the current month in a few clicks. If it is the first request of the month, the employer is obliged to respond to your request.
Several young French sprouts (Nesspay, Rosaly, Salto, Stairwage, etc.) launched in this segment in 2020 and are starting to sign some good references (they all charge a monthly subscription) namely in hotels and restaurants, mass distribution, personal services or logistics.
the french taboo
Stairwage, for example, has just won a contract with the AccorInvest group and its 272 hotels in France. On his side, Rosaly is available from the Bertrand group (Au Bureau, Café Leffe, Burger King France, etc.) fundraising of 10 million euros led by Fin Capital, an American fund specializing in fintech alongside other venture capital firms including The Treasury VC, FJ Labs and Kraken Ventures.
However, no French investor has bet on the start-up. “I got a lot of ‘no’ from the French, who wondered if there was a market,” says Arbia Smiti, founder of Rosaly.
The Stairwage boss, Yann Le Floc’h, notes two other obstacles in France. “Talking about money, especially about salary, is taboo. And when we all started in 2020, the HRDs didn’t have time to listen to us because they were focused on setting up telework”, says the manager.
Integration with payroll software
To evangelize the market, Rosaly opted for a dual approach: selling directly to companies and software integrations payroll platforms, time tracking and employee benefits. Fintech is thus present in the market of ADP, one of the leaders in payroll and HR in France, Groupe Up or even Bimpli (a subsidiary of BPCE about to be acquired by the unicorn Swile).
These integrations are sometimes long and time consuming. “It can take almost a year, says Arbia Smiti, but on the other hand, it creates a huge barrier to entry for competitors. »
“In the United States, the market for great HR software is relatively concentrated, while in France there are hundreds of them”, emphasizes Maxime Mandin, VC at BlackFin Tech.
Towards a neobank?
Another difficulty for these young shoots: debt. are they who advance salaries to employees, not to the company itself. To do this, fintechs must therefore perpetually increase debt, as well as fractional payments or instant microcredit players who do not have without banking license.
“It’s a delicate model in this period of high rates,” said Alexis Majos, an investor at Speedinvest specializing in fintech. “We are actually paying slightly higher interest rates than before, but our default rate is close to zero. The salary share is the only debt guaranteed by the States in Europe”, defends Arbia Smiti.
As with split pay, regulators are increasingly interested in players who advance money. Some were also recently called to order by the Prudential Authority for Control and Resolution (ACPR) for not necessarily respecting “the limits established by the usury prohibition”.
“We don’t do credit and the deposit is compulsory”, responds Arbia Smiti, who specifies that he does not intend to just stick to his deposit model. It has already started to diversify into for example, alerting employees when they are in the red.
“We want to create a great financial app that starts with payroll data. Eventually, we will offer a bank account with a card, cashback, savings products… All this with the aim of avoiding over-indebtedness”, indicates the manager.
A strategy chosen by the American unicorn Dailypay – in which Fin Capital also invested – which has just launched a bank card. No way does Rosaly go to the States. “The market is saturated,” says Arbia Smiti, who wants to expand in Europe, starting with foreign subsidiaries of large French groups.
Same objective in Stairwage. “But not the UK, because there’s a lot of competition,” points out Yann Le Floc’h. Wagestream, one of the country’s leaders, has just raised $175 million with the United States in its sights.