Calgary-based FinTech startup ZayZoon is bringing its services back to Canada after only serving the United States (US) for an extended period.
ZayZoon’s earned wage access (EWA) offering allows workers to receive a percentage of their wages before their employer’s weekly, bi-weekly, or monthly payday. Also referred to as on-demand pay, EWA is marketed as a way to give employees more financial flexibility by providing them with control over when they get paid.
“In a perfect world, every employee would get paid what they’ve earned each day,” ZayZoon general manager of Canada Shubh Sidhu said in a statement. “The reality is that payroll technology and employer cash flow will not allow this to happen.”
ZayZoon first introduced EWA to the Canadian market in 2016, but was “fighting tooth-and-nail to get partnerships,” the startup’s co-founder and president, Tate Hackert, told BetaKit in a 2022 interview. Hackert recalled how the startup signed more partnerships at a two-day trade show in the US than it had landed in Canada in the previous 12 months.
The experience made ZayZoon focus on US expansion until its return to Canada this week. Sidhu told BetaKit in an email statement that several things have changed since ZayZoon left Canada, including awareness about its offering, its own growth, and increased pressure on consumer finances.
“The primary reason is that the number of people who we think need solutions like ours is growing, due to increasing costs and lower spending power,” Sidhu said. “There has not been any significant innovation in Canadian FinTech recently addressing this segment of the market, and we truly believe that the service we offer puts those Canadians who don’t have good options in a better spot.”
Founded in 2014, ZayZoon was created to improve employee cash flow to deal with unexpected expenses, Hackert said in a statement, adding that he’s grateful, as a Canadian, to now make ZayZoon available on its home turf.
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As ZayZoon currently functions in the US, employers integrate its platform for no charge while employees pay a five-dollar transaction fee for a cash advance into their own bank account, or no fee with the ZayZoon prepaid Visa card. The business model has been called “payday loans by another name” because consumers pay to receive their paycheque, although it is a cash advance rather than a loan with interest.
While Canadians won’t have access to the Visa card, ZayZoon told BetaKit that Canadian employers will instead have the option to offer ZayZoon as an employer or employee-paid benefit.
The startup closed a $15-million Series B round extension this past March, having originally closed $34.5 million in debt and equity Series B financing in September 2023. A $20-million portion of the total round was debt financing, while ZayZoon declined to comment on the involvement of secondary capital in the round. The round brought ZayZoon up to $68 million in funding raised to date.
Following the raise back in the fall, a ZayZoon spokesperson told BetaKit that the funding would fuel “future innovation,” product development, and enhanced support for small to medium-sized businesses, noting that ZayZoon intended to expand its team accordingly.
Earlier this year, ZayZoon was recognized by The Canadian Innovation Exchange as one of its top 10 growth startups, as well as Kitchener-Waterloo innovation hub Communitech naming it one of six new Canadian tech companies that have the potential to reach $1 billion in revenue by 2030.
ZayZoon currently counts Amazon warehouses, Dunkin’, Burger King, Domino’s, DoubleTree by Hilton, Lids, Mazda, McDonald’s, Panera Bread, and Subway as customers. Sidhu said ZayZoon has three Canadian partners in place and will soon be in the ADP Canada marketplace.
Feature image courtesy ZayZoon.