Dive Brief:

• Earned wage access provider DailyPay closed on a $200 million asset-backed securitization deal with investment banks Barclays, Citi and Morgan Stanley, the earned wage access provider said in a press release last week. The transaction closed on June 25, according to a spokesperson for the company.
• Barclays was the lead bookrunner and structuring agent for the transaction, while Citi and Morgan Stanley were joint bookrunners. The transaction will enable DailyPay to work with more employers that use its on-demand wage services, according to the June 30 press release
• The $200 million securitization means DailyPay now has nearly $1 billion in debt financing backed by its EWA receivables, including a prior $760 million in secured debt with Barclays, Citi and and the financial firm TPG Angelo Gordon, the release said.

Dive Insight:

New York-based EWA DailyPay contends that it is the first company in the earned wage access world to land such an ABS financing deal. All four classes of the new debt notes will trade publicly, the spokesperson said by email.

“This securitization marks a first for our industry, with strong investor demand validating our differentiated approach,” Deepa Subramanian, chief financial officer of DailyPay, said in a statement. “With $25 billion in payments volume, we are continuously looking for new ways to optimize our capital structure to support our growth ambitions.”

The securitization deal will let DailyPay expand its clientele by catering to more employers that want to offer EWA services to workers, CEO Stacy Greiner noted in the release. The company’s clients include major employers such as Kroger, Six Flags and Dollar Tree, per the company’s website. 

DailyPay has been locked in a battle with a key regulator in New York. In April, the company filed a lawsuit against the New York attorney general’s office, seeking to prevent the enforcement agency from blocking its earned wage access services. Later that month, the New York attorney general’s office sued DailyPay and MoneyLion Technologies for allegedly charging “illegal, high-interest loans” to workers. 

As DailyPay and the New York attorney general face off in court, more states have been adopting EWA laws and implementing regulation to oversee the dozens of companies that have cropped up to offer EWA services over the past decade.

This year, so far, multiple states, including Arkansas, Utah, Indiana and Maryland, have passed EWA laws, and most recently Louisiana joined the group this month. Those states largely had backing from the industry, but some states, including Connecticut, have taken a stricter approach to fees and other parameters that aren’t as appealing to EWA providers.

Meanwhile, other EWA players are working to expand their reach. Last month, Tapcheck, another earned wage access company, integrated its EWA software into Workday’s human resources software, enabling workers to request wage deposits ahead of their typical payday.