US-based early stage social-impact fintech startup Clair has raked in $4.5m in a seed funding round to offer free instant payment services to hourly and gig workers.
The funding round has been led by Upfront Ventures, with participation from Founder Collective and Walkabout Ventures.
Former Venmo COO Michael Vaughan and Seamless founder Paul Appelbaum also joined the round.
Clair will use the fresh capital to disrupt the payday lending industry by enabling 82 million hourly workers and 57 million gig workers in the US get paid instantly.
Moreover, the social fintech hopes to tap new freelancers by offering instant payment services to up and coming gig platforms, in addition to traditional workforce management systems.
Clair’s financial services revolves arounds workforce management, payroll and gig platforms.
The company offers turnkey products as well as APIs to workforce management software providers, to help set up instant payments’ facility for end customers.
It provides workers with direct deposit accounts and offers free advances on a portion of their earned wages, which can be accessed using a Clair debit card.
These advances are later deducted during the next payday.
Clair also wants to be a financial partner for its users, in addition to providing early wages.
Currently, it allows users to set up automatic reminders to put money aside, plus several more savings features.
Clair earns money from the debit card interchange fees paid by the merchants.
Clair co-founder and CEO Nico Simko said: “We are thrilled to be one of the only sources of free capital for America’s hourly and gig workers.
“We believe that everybody should be able to freely access money they have already earned. There are more payday lenders than McDonald’s in the US that charge on average more than 300% annual interest on loans.
“With small business employees making up nearly 50% of the country’s workforce, employers often do not have enough scale to offer better benefits on their own, so they look towards their software providers.
“For us, success means that after a few years of using Clair, our users no longer need to request wage advances because we have helped them get out of living paycheck-to-paycheck.”