Clair, a mission-driven fintech company, announced it raised $175 million in funding to launch the first free, consumer-friendly, on-demand pay solution as a consumer lending program backed by an FDIC-insured bank.
The new program “provides for a participation amount of up to $150 million, which allows front-line workers to take wage advances from Pathward.”
Through the partnership, consumers get “access to Pathward established FDIC-insured Clair Spending and Savings Accounts, among other financial services.”
The funding includes “an additional $25 million in equity in a round led by Thrive Capital. Upfront Ventures and Kairos also participated in the equity round, bringing Clair’s total venture capital funding to $45 million.” As part of the deal, Michael Presser, Investing Partner at Kairos, has been “appointed as a board observer.”
On the heels of 10x revenue growth over the past year, Clair will “use the new funding to expand its team and accelerate adoption, especially among the 76 million hourly workers who represent 56% of the U.S. workforce.”
Through integrations with platforms like TCP Software’s Humanity Scheduling, When I Work, Gusto Embedded and 7shifts, Clair is already “helping more than 50,000 workers get paid as soon as they finish their shifts, instead of waiting weeks for a paycheck – with zero fees.”
Clair’s mobile banking app “enables mainly millennial and Gen Z customers to avoid paying $15 million a year in overdraft fees, and using payday lenders that can charge more than 600% APR.”
Small and large businesses have embraced this solution “amid the front-line worker shortage, with 4 million more job openings than people to fill them, as they’re seeking unique benefits to attract and keep employees.”
Companies using Clair “to provide earned wage advances to employees include EverView, Viking Ranges, and SanStone Health & Rehabilitation, along with franchisees of DoubleTree by Hilton, Sheraton Hotels & Resorts, and GNC.”
This is a strong tool that may “give employers an edge in attracting and retaining talent despite the worker shortage.*
Clair also announced “the launch of Clair for Employers, a set of free, holistic financial wellness benefits for employees of businesses that are not on Clair’s partner platforms.”
Offering an on-demand pay benefit usually “means human resources teams must commit significant time and resources to implement and manage it, but Clair for Employers integrates seamlessly with companies’ payroll providers for free.”
The integration does “not require ongoing maintenance and is fully compliant.”
Employees of companies using Clair for Employers also can “access additional features in their Clair Spending Account, including 3% cash back on gas and groceries purchased on their Clair Debit Mastercard®.”
Nico Simko, Co-founder and CEO of Clair, said:
“Front-line workers are astonishingly underserved, as big banks don’t see them as profit drivers and aren’t building the solutions they need. This lack of support is unfair when half of Americans live paycheck to paycheck and don’t have $500 in savings for an emergency, so timely pay is crucial for them to keep up with their bills. We’re grateful to join forces with investors, partners and employers who believe in our mission of enabling people to responsibly customize their pay cycles to their needs.”
Pathward President Anthony Sharett said:
“We share common values with Clair, and our partnership has exponential power to increase financial access for more Americans regardless of the economic cycle. Through our Banking as a Service solutions and strong risk and compliance framework, we’re proud to be their bank partner, supporting their issuing and lending needs to meet the evolving demands of their growing business.”
As noted in the update, Clair was founded in 2019, “inspired by Simko’s experience as an Argentinian-Swiss immigrant working an hourly job in the U.S.”
Beyond on-demand pay, every Clair customer can “access additional digital banking services, including a Spending Account; a high-yield savings account; and a Clair Debit Mastercard issued by Pathward with free withdrawals at 40,000 in-network ATMs, through a strategic partnership with Mastercard. The top-rated Clair mobile app is available on iOS and Android.”