Photo: Tarek Ayoub and Dean Mao, founders of Cheq. Source: Cheq
Cheq is the first of its kind “Pay on Demand” solution that gives working Australians instant access to their future wages.
FinTech allows customers to access up to $ 200 and charges a fixed transaction fee of 5% with no additional fees or interest, which is refunded by direct debit on your next upcoming payday.
These fees are well below the 52% to 1,000% annually that Cheq said Australians are charged by many payday lenders in similar amounts.
CEO and co-founder Tarek Ayoub said Cheq wanted to end payday lending and help the nearly 6 million Australians who currently live from paycheck to paycheck.
“As our society increasingly embraces the ‘on-demand’ consumption model, it is only natural that we are starting to see this flow spill over into compensation,” said Ayoub.
“Having access to this type of service could prevent thousands of vulnerable Australians from turning to predatory payday lenders, with their extremely high interest rates and fees, and their vicious repayment structures designed to keep you trapped in a crippling debt cycle. “
Currently, the app is only available on the Google Play Store, but Mr Ayoub said they plan to release an iOS version within the next fortnight.
Much like Afterpay did with “buy now, pay later”, Cheq aims to revolutionize the credit landscape by being the first player in Australia to offer “pay on demand” directly to consumers.
“You can get food, TV shows, cleaning services, dog walks and everything else on request.
“So why can’t we still access our own money – money that we have already worked for physically – as soon as it is needed?”
A focus on budgeting and good spending habits
Cheq uses machine learning, AI, location data and statistical analysis to deliver personal financial management solutions and also determine when and for how long individuals have been at work, ensuring that salaries have been accumulated.
The money is only recovered from a user’s bank account once the salary is received, so that they cannot exceed their ability to spend or get into debt.
Mr. Ayoub said Savings.com.au that this technology allows Cheq to easily adapt to each unique user and understand how they operate financially.
“We base a lot of our assessment on whether or not to give you that salary on demand or not on how you spend and your budget with us.
“So when someone signs up, we give them tools to forecast their upcoming bills so they can stay in control.
“We also categorize their expenses to make sure they understand how to actually spend them.”
In addition, Cheq’s technology is able to create an automatic budget for the client, so that they can budget according to their payroll cycle.
“Now part of this budgeting process is also a savings component where they can actually create savings goals for themselves,” Mr. Ayoub said.
“In the future, one of the products that we are offering is actually a savings plan where they could actually save money with us and we can actually invest it for them and give them a higher return. ”
Currently, after taking out a loan with Cheq, you have to pay it back on your next payday.
But Mr Ayoub said there were plans to roll out an installment plan, where the customer would be able to repay the amount in four separate payments.
Six hundred users downloaded Cheq from the App Store within two days of its beta launch, with most of the funds used for transportation and groceries.
Payday loans are a debt trap for millions of Australians
A report released in November of last year confirmed much of what Cheq said about payday loans.
Stop the Debt Trap Alliance research found that just over 4.7 million individual payday loans were taken out between April 2016 and July 2019, worth approximately $ 3.09 billion. .
These loans were taken out by nearly 1.8 million households and generated approximately $ 550 million in net profit for lenders.
The report found that one loan can quickly turn into several, with equivalent annual interest between 112.1% and 407.6%.
“These loans are toxic … it becomes a debt trap.”
Have you ever taken out a payday loan?
– News Breakfast (@BreakfastNews) November 11, 2019