User:BC1278/sandbox/Earnin
| Company type | Private |
|---|---|
| Industry | Financial Services, Apps |
| Founded | 2013 |
| Founders | Ram Palaniappan |
| Headquarters | Palo Alto, California |
Key people | Ram Palaniappan, CEO |
| Website | earnin.com |
Earnin is a company whose mobile app lets its members access the wages they've already earned, before payday, without fees or interest.[1] Founded as Activehours in 2013, the app launched in May 2014.[2][3] It expanded its services in 2019 to include negotiating with doctors and hospitals to lower its users medical bills. [4]
As of December 2018, the app had about one million downloads and was used by workers at about 50,000 businesses.[5]
History
[edit]The company was founded by Ram Palaniappan in 2013.[2] While president of Rushcard, Palaniappan found out that some employees occasionally skipped work because they did not have the money to pay for gas prior to payday. He set up a service to pay employees in advance of payday. After he left Rushcard, former employees asked him if he could continue to offer the service.[6]
Instead of charging interest or a fee, the member is asked to leave a "voluntary tip" for each transaction. The app suggests multiple tip levels for every transaction.[7] In 2019, the company's tip suggestions ranged from zero to $14 for a $100 advance.[8] Tips are capped at about 15% of the $100 daily limit.[9] After a member's scheduled wages are deposited in their bank account by their employer, the company automatically withdraws the cash out and the tip.[10][11] Payments are only made for hours already worked and with a daily cap of $100. There is a pay cycle maximum advance cap that varies by user.[1]
The company raised $4.1 million in 2014.[3] At the time, some questioned whether the business model was viable since tipping was voluntary.[3] The company said in 2014 that it used "bank grade" security. Money transfers are made with the same “automated clearing house” system employed by banks.[2]
The company has partnered with Uber to allow its drivers cash out after a shift.[12] It has a similar arrangement with Sears.[9]
By 2017, the company had raised $65 million in funding.[13] And in December 2018, it raised an additional $125 million.[5] It rebranded from Activehours to Earnin in 2017.[14]
In April 2019, the New York State Department of Financial Services investigated whether the company's "tipping" system skirted New York State lending laws regulating payday lending.[15][16] An article in the New York Post said that members who do not leave tips may have their monthly maximum restricted, which may trigger interest rate disclosure laws.[17] New York State subpoenaed information from the company, including a calculation of annual percentage rates if tips were measured as fees or interest.[16] In 2019, there were also consumer complaints about glitches sometimes resulting in delays in fund transfers.[17]
In May 2019, the company began offering its users a service to negotiate for a reduction in outstanding doctor or hospital hospital bills. The company will also negotiate installment payments for outstanding medical bills if it can. [4] The service is offered without a fee and members are asked to leave a voluntary tip for good service.[18]
References
[edit]- ^ a b Gensler, Lauren (2014-08-07). "Want To Cash In On Your Paycheck Before Payday? There's An App For That". Forbes. Retrieved 2019-07-08.
- ^ a b c Carrns, Ann (2014-05-22). "Getting Your Wages, Before Payday". The New York Times. ISSN 0362-4331. Retrieved 2019-07-03.
- ^ a b c Lapowsky, Issie (2014-08-05). "The Next Big Thing You Missed: Startup Offers Payday Advances Without the Pesky Loan-Sharking". Wired. ISSN 1059-1028. Retrieved 2019-07-08.
- ^ a b Rubin, Ben Fox (2019-05-22). "You can hire this startup -- for free -- to negotiate down your medical bills". CNET. Retrieved 2019-07-03.
- ^ a b Clak, Kate (2019-12-20). "Earnin raises $125M to help workers track and cash out wages in real time". TechCrunch. Retrieved 2019-07-08.
- ^ O'Donovan, Caroline (2015-07-15). "The Future Of Work Might Not Include Payday". BuzzFeed News. Retrieved 2019-07-03.
- ^ Weisbaum, Herb (2014-08-03). "New app offers access to your pay as you earn it". CNBC. Retrieved 2019-07-03.
- ^ Fosco, Molly (2019-05-08). "The Rise of Digital Tipping — From Music to Your Own Paycheck". OZY. Retrieved 2019-07-10.
- ^ a b Shieber, Jonathan. "Activehours raises $39 million for its new take on cash advances". TechCrunch. Retrieved 2019-07-08.
- ^ Manos, Matthew (2015-11-24). "How the 'pay-what-you-want' model can work for you". The Business Journals. Retrieved 2019-07-08.
- ^ Wisniewski, Mary (2015-11-12). "New Budgeting Apps Aim to Disrupt Payday Lending". American Banker. Retrieved 2019-07-08.
- ^ Loizos, Connie. "Activehours, which makes every day a payday, just raised $22 million in Series A funding". TechCrunch. Retrieved 2019-07-08.
- ^ "Activehours raises $39 million for its new take on cash advances". TechCrunch. Retrieved 2019-07-08.
- ^ "Earnin raises $125 million for payday advance platform without fees". VentureBeat. 2018-12-20. Retrieved 2019-07-08.
- ^ Dugan, Kevin (2019-03-28). "Cash-advance app Earnin gets subpoenaed by NY regulator: source". New York Post. Retrieved 2019-07-08.
- ^ a b Crosman, Penny (2019-04-03). "A payday lender in disguise? New York investigates the Earnin app". American Banker. Retrieved 2019-07-08.
- ^ a b Dugan, Kevin (2019-03-22). "Popular cash advance app Earnin operating in payday loan 'gray area,' critics claim". New York Post. Retrieved 2019-07-08.
- ^ Reader, Ruth (2019-05-22). "This company wants to help you lower your medical bills (some catches may apply)". Fast Company. Retrieved 2019-07-08.