Fintech startup gives Saudi workers early access to salaries, commissions

Fintech startup gives Saudi workers early access to salaries, commissions
Michael Trueschler, co-founder of FlexxPay
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Updated 14 March 2021

Fintech startup gives Saudi workers early access to salaries, commissions

Fintech startup gives Saudi workers early access to salaries, commissions
  • FlexxPay has secured $4.5 million in funding to develop its services and expand further across the Kingdom

JEDDAH: Many people struggle to get by each month as they wait for pay day, whether due to sudden family emergencies or health issues not covered by medical insurance.

FlexxPay, a Shariah-compliant fintech company with headquarters in Saudi Arabia and the UAE, aims to address this issue by giving Saudi employees early access to their earned income, and in a way that is also feasible for their employers.

Through his work in the region for 17 years, Michael Trueschler, co-founder of FlexxPay, has witnessed many employees struggle with asking for advance payments to cover unexpected expenses that arise during the month.

“It’s a headache for the company. It’s a headache for HR, they have to listen to all the stories, take decisions. It’s not nice for the employee to explain themselves. There must be a better way,” Trueschler told Arab News.

This inspired him to establish FlexxPay in 2018 to help address the issue and give workers access to a range of earnings, including salaries, commissions, pensions and (soon to be launched) end-of-service benefits.

In February, FlexxPay raised $3 million in a pre-series A round of funding, on top of a previous funding round of $1.5 million, bringing FlexxPay’s total investment to date to $4.5 million. The company intends to use the funds to further enhance its technology platform and to grow its corporate client base in the region.

Truschler said that since the peak of the pandemic last spring, the platform has increased its monthly transactions sevenfold and expected an increase of more than tenfold in the next six months. “This is just the beginning of a significant expansion for us as people need solutions like FlexxPay more than ever.”

He added that customers who used the service are 60 percent more likely to use it again, and the average usage is twice per month.

FlexxPay claimed that by reducing employees’ financial stress, some of his clients have seen a 20 percent decrease in sick days, and less workload for HR teams as a result.

To use the service, an employee downloads the app and can see how much they have earned since the beginning of the month. Using the app, they can transfer a portion of that amount to their account without having to speak to HR or sending any request.

“The amount of money depends on the salary and the calculation is very simple. So, imagine you earn SR10,000 ($2,666). By the middle of the month, you’ve worked for 15 days for the company, but you don’t get paid and have to wait another 15 days. But you already earned SR5,000, so that’s money you can access,” Trueschler said.

The limit is based on the employee’s salary and the days that they have worked since their last paycheck to determine the available balance.

One of FlexxPay’s other services covers commission-based work, targeting sales-focused businesses. With salespeople driven by commission, a large portion of their income is dependent on their monthly performance.

“The issue is that they usually have to wait at least one month . . . often times three months, until the quarterly KPIs are confirmed and checked by the company. And then they get paid. But through FlexxPay, you can pay your sales guys on the spot, on a daily or weekly basis, when you see that they’re reaching the targets, you can instantly give them access to the commission,” Trueschler said.

According to the co-founder, FlexxPay has assisted companies to increase their sales by 17 percent, simply due to the tool that helps to motivate employees by giving them immediate access to their commission sums.

“It’s a human behavior, right? They are completely differently motivated. If you come in in the morning, you do a good job and, in the evening, you can see already the reward in your FlexxPay app, and you can access it. It’s a big push for salespeople to go the extra mile because they know they don’t have to wait two or three months for the commission,” he said.

When it comes to applying the service to pensioners, FlexxPay is already in discussions with its partner in the Kingdom, Riyadh Bank, to introduce it into Saudi Arabia.

“They are facilitating the discussions with the public entities. The objective is to offer them a white label solution that is like FlexxPay, but under a different brand from the entity so that they can route out to all the pensioners in Saudi Arabia,” Trueschler said.

Similar to regular salary advances, pensioners also face unexpected circumstances during the month. FlexxPay will give them early access to their available pension funds.

FlexxPay is also free of charge for companies, so does not require a separate budget. Most companies acquire the service, and unless it is used they do not need to pay.

“For the agreement we have with the company, the transaction fee is basically representing the SARS fee (software as a service fee) that the companies have to pay depending on how much the employees are using the platform and how many transactions are now in the agreement,” Trueschler said.

Most companies do not end up paying, as they choose to pass the fee on to the employees, he said. For a regular employee, the amount they withdraw does not change the transaction fee as it is fixed.


Egypt’s petroleum sector made up 24% of GDP — minister

Egypt’s petroleum sector made up 24% of GDP — minister
Updated 15 April 2021

Egypt’s petroleum sector made up 24% of GDP — minister

Egypt’s petroleum sector made up 24% of GDP — minister
  • More than 60 international oil and gas companies operate in Egypt, including well-known names such as ExxonMobil and Chevron

CAIRO: The oil and gas sector contributed 24 percent of Egypt’s gross domestic product (GDP) in 2020 and was one of the key sectors that helped rebuild the country’s economy in the wake of the economic challenges since 2011, according to a senior government minister.

Egyptian Petroleum Minister Tariq El-Molla said in a statement that the sector had played a significant role in the economic reforms the government had implemented, which helped to create an appealing environment for investors.

More than 60 international oil and gas companies operate in Egypt, including well-known names such as ExxonMobil and Chevron.

Egypt launched the EastMed Gas Forum in 2018, which was designed to encourage strategic dialogue between Eastern Mediterranean countries — whether they are producers or consumers — in a bid to achieve optimal economic benefits and address common regional challenges.

The minister said that the EastMed Gas Forum charter was signed in September 2020 and had succeeded in attracting the world’s attention. Several countries had expressed their desire to join the forum — including France, which had been approved as a permanent member, and the US as an observer.

El-Molla confirmed that the Natural Gas Advisory Committee has been formed with 29 members and international institutions.

He said that natural gas had emerged as an important transitional fuel due to its environmentally friendly nature and because the Egyptian government had introduced many projects as part of a bid to maximize gas use in homes and cars.

El-Molla added that hydrogen had become an important source of fuel, and gained the support of international institutions. One example was Egypt’s partnering with the EU to establish a special committee to develop a strategy for the use, production and exploration of hydrogen.


Almost half of Jeddah’s hotel rooms were booked in March

Almost half of Jeddah’s hotel rooms were booked in March
Updated 15 April 2021

Almost half of Jeddah’s hotel rooms were booked in March

Almost half of Jeddah’s hotel rooms were booked in March
  • Industry report says occupancy rates were second-highest since pandemic started

JEDDAH: The hotel industry in Saudi Arabia’s commercial center reported one of its highest monthly occupancy levels of the COVID-19 pandemic period, according to preliminary March 2021 data from the hotel management analytics firm Smith Travel Research (STR).

According to the figures, hotel occupancy in Jeddah reached 47.1 percent in March, and the revenue per available room (RevPAR) reached SR318.72 ($84.99).

March occupancy and RevPAR rates were the second-highest since February 2020, just behind figures for January 2021. However, the average daily rate for hotel rooms was SR676.36, remaining in line with the levels recorded in the second half of 2020.

Earlier this month, a report by STR found that Saudi Arabia has the world’s biggest hotel pipeline, anticipating a 67.1 percent increase in room supply over the next three years, the highest among the 50 most populated countries. The data showed 73,057 rooms in the Saudi hotel pipeline, with 16,965 scheduled to come online in 2021. 

The Jeddah hotel market is expected to increase hotel supply by more than 97 percent, with 11,198 rooms under development.


Saudia targets post-pandemic profitability, privatization

Saudia targets post-pandemic profitability, privatization
Updated 15 April 2021

Saudia targets post-pandemic profitability, privatization

Saudia targets post-pandemic profitability, privatization
  • Kingdom’s flag carrier gearing up for resumption of international passenger travel on May 17

RIYADH: A few minutes into our interview and it was clear that the CEO of Saudia, the Kingdom’s state-owned flag carrier, wanted to set the record straight about the aviation sector during the coronavirus disease (COVID-19) pandemic.

“Many people believe that since flying has been reduced, we (the airline industry) have just been able to relax and take a breather,” said Capt. Ibrahim AlKoshy.

“Talking to everybody in the airline industry, it’s been one of the busiest times for anyone … We took that challenge as an opportunity to actually come out stronger.”

The aviation industry has certainly had its challenges. In February, the regional president of the International Air Transport Association (IATA) told Argaam that airlines in Saudi Arabia incurred $9.6 billion in losses as passenger traffic fell by 70 percent.

The latest figures released by IATA earlier this month showed that for Middle Eastern airlines, demand in February 2021 was down 83.1 percent compared to the same month in 2019.

Capt. Ibrahim AlKoshy
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Flights were grounded in the Kingdom in March 2020. While domestic traffic resumed at the end of May last year, and Saudia is gearing up for international flights to restart on May 17, AlKoshy said it will still be some time before a recovery to pre-pandemic levels.

“Our estimates are pretty much in line with IATA and other airlines because we’re sharing data on market recovery,” he added.

“We don’t see that full recovery taking place in international (passenger traffic) until 2024. The remainder of 2021, we do see a strong domestic (and) slight improvement in international … It seems people are still a bit cautious about long-distance traveling.”

A survey in December found that 46 percent of Saudi respondents are looking forward to traveling internationally once restrictions are lifted.

Saudia is putting everything in place to help inspire confidence in travelers to feel safe getting on an aircraft again.

FASTFACT

Operating to 90 destinations in 36 countries, Saudia has a number of code-sharing agreements and partnerships with airlines such as Abu Dhabi’s Etihad Airways and China Southern Airlines.

AlKoshy said on April 19, Saudia will trial a digital travel and health pass developed by IATA, and has implemented around 50 COVID-related health initiatives on its flights, resulting in it being awarded Diamond status by the Airline Passenger Experience Association for its efforts to ensure the highest standards of cleanliness and sanitation across its operations. “The practices that we did at Saudia weren’t done generically. We actually hired infectious disease physicians to work with us on developing the protocols,” he added.

“We’re quite proud of how we actually put that together … It seems to have gained passenger confidence quite well.”

Rebuilding passenger confidence is important, and one of the main reasons that AlKoshy and his team have not been able to take a breather over the last year.

Operating to 90 destinations in 36 countries, Saudia has a number of code-sharing agreements and partnerships with airlines such as Abu Dhabi’s Etihad Airways and China Southern Airlines. (File photo)

“It’s been a complete revisit to the strategy … We’re really looking at a lot of operational efficiencies, better utilization of all resources, aircraft crew etc., not just because of COVID-19 but it’s the right thing to do. We’ll come out much stronger on this one,” he said.

Reuters reported in December that the Kingdom’s Finance Ministry approved SR13.6 billion ($3.6 billion) for Saudia in 2019, and SR6.4 billion in the first half of 2020. AlKoshy acknowledged that like many companies during the pandemic, help from the government was needed.

While he did not get into exact figures, he said the impression that the airline is heavily government-subsidized is not accurate.

“Saudia is a state-owned airline at this stage. We’re working toward privatization, but the truth of the matter is many of the subsidies that historically people believe Saudia receives are no longer received,” he added.

“We’re operating already on our own budget. There’s been some support for staffing etc. for COVID-19, but I think it’s really important to understand that Saudia actually entered with a strong balance sheet at the beginning of this (pandemic) and we’re doing quite well. However, that’s not to say support hasn’t been received during this period. It’s due to COVID-19.”

AlKoshy forecasts that the airline will be back in the black within a few years. “What we’re looking at is … Saudia sees profitability in 2024 without question,” he said.

Privatization of state assets is a core priority for the Saudi government going forward. “Privatization is part of the plan at the Saudia group level and for the airline as well,” he said.

Last month, the airline signed an agreement worth SR11.2 billion to partially finance new aircraft orders up until mid-2024.

According to its 2020 official factsheet Saudia has 144 aircraft, but AlKoshy confirmed that there are plans for new orders.

“Saudia, when looking at its next fleet offers as well, we have our requirements. We’ll definitely be looking at the best options we have with both Boeing and Airbus,” he said. “And there’s another fleet expansion expected that we’ll be going through, so we’ll see how we can work with Boeing and Airbus. They’ve been partners with Saudia for quite a long time. It’s something we’ll look at.”

Operating to 90 destinations in 36 countries, Saudia has a number of code-sharing agreements and partnerships with airlines such as Abu Dhabi’s Etihad Airways and China Southern Airlines.

“We have very strong plans to strengthen that virtual network of codeshares, possibly through joint ventures. There are many things that are being looked at. Some of them have been actioned already,” AlKoshy said.

As the airline counts down the days to May 17, he and his team will be looking forward to getting back to some form of normalization.

But, as he was keen to point out, they certainly were not resting on their laurels over the last year.

“It’s been a very challenging time for the airline industry as a whole, but we’ll come out much stronger on this one,” he said. “Saudia has very aggressive growth plans.”


O2, Virgin Media win provisional UK approval for $43bn merger

O2, Virgin Media win provisional UK approval for $43bn merger
Updated 15 April 2021

O2, Virgin Media win provisional UK approval for $43bn merger

O2, Virgin Media win provisional UK approval for $43bn merger
  • The two telecommunications groups agreed last May to merge their British businesses to create a broadband and mobile powerhouse in a challenge to market leader BT Group

LONDON: Britain’s competition watchdog said on Wednesday it had provisionally cleared the £31.4 billion ($43.3 billion) merger between broadband company Virgin Media and Telefonica’s UK mobile network O2.

The Competition and Markets Authority (CMA), addressing one of its primary concerns, said that its investigation had concluded the deal was unlikely to result in a substantial reduction of competition in the supply of wholesale mobile services.

“A thorough analysis of the evidence gathered ... has shown that the deal is unlikely to lead to higher prices or a reduced quality of mobile services — meaning customers should continue to benefit from strong competition,” said Martin Coleman, CMA Panel Inquiry Chair.

The regulator said it believed there was sufficient competition within the market to prevent either player raising wholesale broadband or mobile prices to the detriment of rivals who use its infrastructure.

The decision was welcomed by Virgin Media owner Liberty Global Plc. and Spain-based Telefonica, which took note of the CMA’s provisional conclusions.

“We continue to work constructively with the CMA to achieve a positive outcome and continue to expect closing around the middle of this year,” a spokesman for Telefonica told Reuters on Wednesday.

The two telecommunications groups agreed last May to merge their British businesses to create a broadband and mobile powerhouse in a challenge to market leader BT Group.

The two sides said earlier this month that Virgin Media boss Lutz Schuler would become chief executive of the new company.


PIF-backed fund to help UAE HR firm expand into KSA with $20m investment

PIF-backed fund to help UAE HR firm expand into KSA with $20m investment
Updated 14 April 2021

PIF-backed fund to help UAE HR firm expand into KSA with $20m investment

PIF-backed fund to help UAE HR firm expand into KSA with $20m investment
  • Dubai-based Reach Group first recipient from NBK Capital Partners’ $300m Shariah credit fund

JEDDAH: A Dubai-based human resources consultancy firm has become the first company to receive financing from a new $300 million Shariah credit fund anchored by Saudi Arabia’s sovereign wealth fund, it was announced this week.

Reach Group focuses on supplying skilled and semi-skilled employees to government, private-sector companies and quasi-public entities on long-term contracts.

The company has 6,000 outsourced full-time employees in the UAE, making it among the largest temporary staffing providers in the country.

It is planning to use its new $20 million investment to expand into the Saudi market through the acquisition of a local outsourcing company in the Kingdom.

“This transaction provides additional capital for us to expand into Saudi Arabia, which we’ve viewed as a natural growth area for our business,” said Reach Group’s founder and CEO Malik Melhem.

The $300 million Shariah Credit Opportunities Fund was launched in February by the Dubai-headquartered National Bank of Kuwait Capital Partners (NBKCP), a subsidiary of Kuwait’s biggest bank.

The fund’s anchor investor is the Saudi Public Investment Fund, and is expected to make 10-12 investments of $15-$50 million over the next eight years. Reach Group is the first such investment to be announced.

“Reach is a highly reputable leader in outsourced staffing solutions in the region. We were pleased to work with its founder and management team to structure a financing solution that allowed Reach to enter the Saudi market,” said NBKCP CEO Yaser Moustafa.