Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: P2P, Lending, Digital Bonds, BNPL, Private Credit
XRP Unlocks Liquidity in Maple Finance Game-Changing Loan
DeFi | Jan 20, 2025
Image courtesy of AI
XRP Becomes Collateral as Maple Finance Unlocks New Liquidity for XRP Holders
Maple Finance, a leader in institutional crypto lending, shared on X that they completed their first defi loan ever using XRP as collateral, unlocking greater liquidity and flexibility for XRP holders without requiring borrowers to sell their assets. The groundbreaking loan was facilitated by Digital Wealth Partners who explained on Linkedin that it was a seven-figure loan denominated in USDC. The entire process took just 72 hours to complete spotlighting how the efficiencies of blockchain are changing the way financial transactions are conducted.
See: Bank of Canada Publishes Analytical Notes on DeFi
Matthew Snider, CIO of Digital Wealth Partners:
"In just three business days, we turned client assets into actionable liquidity, driven by smart contract repayments and backed by institutional custody for increased security."
Benefits for XRP Holders
This new decentralized finance lending model allows borrowers to source loans without selling their XRP, and offers attractive Loan to Value (LTV) rates while smart contracts reduce complexity and institutional grade custody safeguard the pledged assets.
The price of XRP has surged recently to approx 35% in just the past 7 days (currently trading at $3.13 at the time of writing) due to President Trump's pro-crypto stance and perceived weak legal appeal from the Securities and Exchange Commission in the ongoing legal battle between XRP and the SEC.
Maple Finance and Syrup.fi Ecosystem
Maple Finance is based in Melbourne, Australia and operates globally providing institutional grade blockchain lending solutions. The platform serves accredited investors via its KYC-compliant processes and offers collateralized loans for cryptocurrencies like Bitcoin, Ethereum, Solana, and USDC.
See: Ep20-Jan 11: Bitcoin Backed Loans and 2x Credit – Putting Your Crypto to Work
Further, Maple Finance developed a protocol called Syrup.fi, which extends Maple Finance's institutional grade loans to the broader DeFi community allowing individual users to access high quality yields generated from Maple's established lending infrastructure.
Key DeFi Statistics in Jan 2025
According to DefiLama, at the time of writing the Total Value Locked (TVL) across all chains and defi protocols is approx $126.5 billion which has increased 2.79% in the lats 24 hours alone.
The total market cap of all Stablecoins is currently $210.072 billion (provides liquidity across all defi platforms).
The previous 24 hour trading volume across all defi platforms is $42.889 billion, a very active and growing market.
Looking Ahead
XRP experts anticipate it to play a bigger role in the future of Web3's financial ecosystem. Ripple is focusing on tokenizing real world assets (RWA) and enabling seamless payments and transfers across different blockchain networks.
See: SEC Files Appeal Brief as XRP Hits Record High
This effort may lead to the development of more financial tools that use XRP such as the XRP-backed loan demonstrating the potential for crypto backed loans to innovate and expand.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Who Should Apply For a Small Business Loan Online?
Dec 17, 2024
Image: Freepik/shurkin son
There are various financing solutions available to your business, from term loans from banks and online lenders, to microloans. This article will briefly review some common methods.
Traditional lenders typically require good credit, two years in business and extensive paperwork in order to qualify for loans. Furthermore, collateral may also be required along with personal guarantees as conditions of their loans.
Small business loans with Greenbox Capital offer a more flexible and accessible financing option for businesses оf all sizes. With a focus оn supporting entrepreneurs, Greenbox Capital provides a streamlined application process and quick funding decisions.
Businesses looking to open another location
If your customer base and sales have grown steadily over time, now may be an opportune time to expand by opening another location. Doing so can bring more revenue, greater presence in a market or the opportunity to test out a product or service you may have been working on in secret.
Before applying for a small business loan, make sure your company is ready for expansion. This involves having solid inventory management systems in place as well as financial security to cover additional location costs. Furthermore, profitability over an extended period must also be demonstrated by demonstrating consistent profits over time.
An effective personal and business credit scores are both important components when applying for a small business loan. Lenders use these scores to assess your ability to repay loans and will look for an adequate ratio between debt-service coverage and income - this ensures your cash flows can support repayment without negatively affecting operations of your business.
Private lenders may be an attractive option if your business doesn't fit within the parameters of government loan programs, such as being in business for a certain length of time or meeting minimum credit score requirements. Some offer unsecured small business loans while others require collateral like commercial real estate or vehicles as security.
Business loans іn Ontario can be a valuable tool for businesses looking tо expand оr improve their operations. By understanding the different types оf loans available and the specific requirements оf lenders, you can increase your chances оf securing the financing you need.
Businesses looking to purchase or upgrade equipment
If you need to upgrade equipment, furniture, supplies or inventory for your small business, applying for a small business loan might be necessary. Such financing allows you to expand operations while drawing in new customers; however, to qualify you'll have to meet specific criteria, including meeting credit, financial and business requirements or offering collateral - having these documents ready can speed up the process and help ensure a swift arrival of funds.
Before applying for business loans, it's essential that you fully comprehend their various types and the way they operate. Some lenders only require your personal and business credit scores while others may need verification of revenue and length of time in business. Furthermore, you should explore each lender's application and funding timelines; online lenders usually have quicker processing and disbursement periods compared with traditional brick-and-mortar banks.
Once you've decided which financing to apply for, it's time to assess its application and funding requirements. Some lenders allow online applications while others require in-person interviews or extensive documentation. You will also need to determine what collateral you can offer as most business loans require collateral as a safeguard in case repayment becomes impossible.
Businesses with low credit or in need cash flow during a seasonal rush or slowdown
Lenders want to see that you are generating enough income to cover your bills, and can repay a loan in full. Affiliating all income with one checking account will assist in this regard; invoicing invoices promptly is also beneficial, while following up promptly when payments become late. Furthermore, creating cash flow projections that span 12 months and compare them against actual earnings on an ongoing basis may further bolster your chances.
Lenders' requirements for business loans will differ, with most requiring personal and business credit scores as well as at least two years in operation before considering offering funding. Some may require collateral or even personal guarantees in some instances.
To secure a small business loan, it's necessary to prepare comprehensive documentation that includes your business plan and financial statements. These typically include your personal and business tax returns, profit and loss statements and bank account statements for both you and your business.
Once you've collected all of the required information, apply for a loan with a lender that best meets your needs - either online or in person - that offers terms, interest rates and disbursement processes tailored specifically for you. Keep in mind that different lenders offer differing terms, interest rates and disbursement processes - some may have faster approval processes than traditional brick-and-mortar banks making online lenders an appealing option for busy entrepreneurs needing quick access to funding.
Minority-owned or women-owned businesses
Minority or women-owned businesses (MWB or M/WBs) are commercial enterprises owned, controlled, and operated primarily by one or more women or men who control at least 51% of its voting stock and oversee its daily decision making and operations.
The federal government has set goals to support and assist these businesses. Some larger corporations also offer programs designed to assist certified minority- and women-owned business companies, offering advantages like access to financial counseling as well as networking with industry leaders.
See: Strategies for Achieving Product-Market Fit in Web3
Begin your certification journey by gathering all the requirements necessary. Both the National Minority Supplier Development Council and Women's Business Enterprise National Council offer websites listing all necessary materials. Once collected, an employee from these organizations will visit your company to observe its operations firsthand and verify any necessary details. Once complete, pay your certification fee which typically ranges between $350 to $1,250 - complete your application and begin!
Apply to the Business Diversity Lending Program, which offers funding to small businesses owned and run by minority groups or women in the US. Requirements of this program include being owned or run by women/minority owners with less than $15 million net worth and having at least $5 million annual revenue.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Canada’s SMBs Deserve Better Banking. Lessons from US Fintechs
SMB Banking | Nov 4, 2024
Image: Freepik/wavebreakmedia micro
Survey Reveals Need for Flexible Banking Solutions to Support Canadian SMBs
Canada’s small and medium-sized businesses (SMBs) are a backbone of the economy. Canada ISED publication shows that small businesses (<500 employees) employed 52.12% of the work force creating 9.29 million jobs in the country. Even the smallest businesses with <100 employees hire 38.71% of all employed. These businesses nurture innovation, create jobs and growth, and strengthen communities but a recent survey of 700 Canadian SMBs by Canadian fintech, Float, highlights that high expenses and fees, tough access to credit, and outdated financial systems make it very challenging for SMBs to be productive and thrive.
Simply put, many of these businesses aren’t getting the support they need from traditional banks because Canada's financial system isn't designed for SMBs. Instead, it’s set up to support big banks and large corporations that have steady cash flows, solid credit histories, and plenty of resources. Traditional banking products work well for these bigger players because they focus on stability, low risk, and lengthy, careful approval processes.
Snapshot of SMB Challenges from Survey Responses
While it's not meant to be easy running a small business, below are select data points based on survey responses that point to the lack of financial infrastructure challenges for SMBs specifically.
See: Open Banking: Revolutionizing Financial Data Sharing
1. Financial Barriers (many SMBs experience serious financial obstacles)
- Approx 40% of business owners report that rising operating costs are their biggest concern, making it difficult to manage expenses and maintain profitability.
- Almost 30% of SMBs struggle to secure loans or credit due to strict lending requirements from banks. This lack of access limits their ability manage cash flows or invest in growth.
- Many participants are concerned that increasing interest rates and fees are making borrowing more expensive, which adds to the financial strain.
2. Inefficient Processes
- Many SMB owners report spending up to 40 hours a month managing payments and handling paperwork, diverting their attention from growing their businesses.
- More than half of SMBs feel that traditional banks do not understand their business or its unique needs. They express dissatisfaction with an outdated banking system:
- Inadequate customer service
- Low yields on cash balances
- Unsatisfactory interest rates on business savings accounts
- Lack of attractive cashback or rewards programs
Image: Float Financial (SMB Survey Results)
U.S. Banking Products that Canada Could Adopt to Better Serve SMBs
Given that Canadian SMBs feel underserved and supported. Let's take a closer look at just a few popular products available in the US and how similar solutions could benefit Canadian SMBs, assuming banks or fintechs could step in/up with similar support.
See: The Case for Better Banking Options for Canadian SMEs
1. Revenue-based financing (RBF) is a flexible funding model available to SMBs in the U.S. that allows them to repay loans as a percentage of their future revenue. This approach is a great fit for early-stage companies with variable cash flow since it matches and scales repayments with revenue generated. Canadian fintech, Clearbanc (now Clearco), originally popularized RBF in both Canada and the U.S.. Canadian banks largely offer traditional standard loans with fixed repayments making it more difficult for SMBs to manage cash flow during slower months.
2. Business Credit Cards Without Personal Guarantees Companies like Brex and Divvy in the U.S. provide business credit cards that don’t require a personal guarantee or personal credit check, therefore helping entrepreneurs build business credit independently of their personal credit. These business cards often include expense management software and other credit building tools. Most Canadian banks still require a personal guarantee on business credit cards which can deter new business owners or hurt those with limited personal credit history.
3. Invoice Factoring allows businesses to receive early payment on outstanding invoices to be collected which is incredibly useful for managing cash flow without accumulating debt. Fundbox provides this for SMBs in the U.S.. In Canada, there are a number of fintechs offering invoice factoring services like FundThrough but traditional banks don't generally provide this option leaving SMBs with limited cash flow solutions other than debt.
See: The Role of Digital Banking in Supporting SMEs and Startups
4. Quick Access to Capital can help SMB capital solutions when they need it most. In the U.S. digital lenders such as BlueVine offer quick access to business lines of credit by using real time bank transaction data instead of traditional credit scores or collateral. While in Canada, banks typically have longer approval processes making it more difficult for SMBs to access cash quickly.
Looking Ahead
It’s time for Canada’s financial institutions and policymakers to move faster on Open Banking in Canada and other policies to provide better financial infrastructure for small businesses, or risk further decline in productivity.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Breaking Free from the Chains of Debt: Your Guide to Debt Review
Oct 19, 2024
Money problems can be really stressful. If you're having trouble paying your bills and debts, you might feel worried, scared, or even hopeless. But there's good news: there's a process called debt review that can help people who are struggling with too much debt.
What does it mean to be over-indebted?
Before we talk about debt review, let's understand what it means to be "over-indebted." This is when you have so much debt that you can't pay all your bills and debts each month. You might be using one credit card to pay off another, or you might be missing payments on your loans. If you're worried about money all the time and can't seem to get ahead, you might be over-indebted.
How does debt review help?
Debt review is a legal process in South Africa that helps people who are over-indebted. It's like having a financial expert on your side to help you deal with your debts. The goal is to make your debts more manageable so you can eventually pay them off and get back to a healthy financial situation.
The Benefits of Debt Review
Debt review offers numerous advantages for those struggling with debt:
Reduced Monthly Payments:
One of the biggest benefits of debt review is that it can lower your monthly debt payments. A debt counsellor will look at your income and expenses and negotiate with your creditors (the people or companies you owe money to) to reduce your payments. This can make it easier for you to afford your debts and still have money for other important things.
Legal Protection:
When you're under debt review, your creditors can't take legal action against you. This means they can't sue you, repossess your things, or harass you for payments. It gives you some breathing room to focus on getting your finances in order.
Structured Repayment Plan:
Debt review provides you with a clear plan to pay off your debts. Instead of juggling multiple payments to different creditors, you'll make one payment each month that gets divided among your debts. This makes it easier to keep track of your progress and stay motivated.
Professional Guidance:
A debt counsellor will guide you through the whole process. They'll give you advice on managing your money better and help you understand your financial situation. It's like having a personal finance coach to support you.
Improved Credit Score:
While your credit score might go down at first when you enter debt review, in the long run, it can actually help improve your credit. As you consistently make payments and reduce your debt, your credit score will start to get better.
Peace of Mind:
Perhaps one of the most important benefits is the relief from stress. Knowing that you have a plan to deal with your debts and that you're protected from legal action can give you peace of mind and help you focus on other areas of your life.
The Debt Review Process: A Step-by-Step Guide
The debt review process involves several key steps:
Assessment:
First, you'll meet with a debt counsellor. They'll look at your income, expenses, and debts to see if you qualify for debt review. They'll ask you for information about your financial situation, so be prepared to share details about your income, expenses, and debts.
Application:
If the counsellor determines that you're over-indebted and debt review is right for you, they'll help you fill out an application. This officially starts the debt review process.
Notification:
The debt counsellor will then notify all your creditors that you've applied for debt review. This is when the legal protection starts – your creditors can't take action against you once they know you're in the debt review process.
Negotiation:
The debt counsellor will talk to your creditors and try to negotiate better terms for your debts. This might include lower interest rates or extended repayment periods.
Repayment Plan:
Based on these negotiations, the debt counsellor will create a new repayment plan for you. This plan will show how much you'll pay each month and how it will be divided among your debts.
Court Order:
The repayment plan needs to be approved by a court. Your debt counsellor will submit the plan to the court, and if it's approved, it becomes a legally binding agreement.
Monthly Payments:
Once the plan is approved, you'll start making your new, lower monthly payments. Usually, you'll pay one amount to a payment distribution agency, which will then pay your creditors for you.
Clearance Certificate:
When you've paid off all your debts under the debt review plan, you'll receive a clearance certificate. This shows that you've successfully completed the debt review process and are now debt-free!
Who Qualifies for Debt Review?
To qualify for debt review, you must meet certain criteria:
Over-indebted:
You must be struggling to pay your debts each month. If you can comfortably pay all your bills and debts, you probably won't qualify.
Regular Income:
You need to have some form of regular income. This could be a salary, pension, or other steady source of money. The debt review process relies on you being able to make regular payments.
South African Citizen or Permanent Resident:
Debt review is only available to South African citizens or people with permanent residency in South Africa.
Valid South African ID:
You'll need to provide a valid South African ID document as part of the application process.
Choosing the Right Debt Counsellor
Selecting a reputable and experienced debt counsellor is crucial for a successful debt review process. Here are some factors to consider:
Registration:
Make sure the debt counsellor is registered with the National Credit Regulator (NCR). You can check this on the NCR's website.
Experience:
Look for a counsellor with a good track record of helping people through debt review. Don't be afraid to ask how long they've been doing this work and how many clients they've helped.
Fees:
Understand what fees the counsellor charges. While there are standard fees for debt review, some counsellors might charge extra for certain services. Make sure you know exactly what you'll be paying.
Communication:
Choose a counsellor who explains things clearly and is easy to talk to. You'll be working closely with this person, so good communication is important.
Reviews:
Look for reviews or testimonials from other clients. This can give you an idea of what it's like to work with the counsellor.
Potential Drawbacks of Debt Review
While debt review offers significant benefits, it's essential to be aware of potential drawbacks:
Restricted Access to Credit:
While you're under debt review, you won't be able to take out new credit. This means no new loans, credit cards, or store accounts until you've completed the process.
Fees:
There are fees involved in debt review, including the debt counsellor's fee and legal fees. However, these are usually included in your repayment plan.
Lengthy Process:
Debt review isn't a quick fix. It can take several years to complete the process, depending on how much debt you have.
Impact on Credit Score:
Your credit score will be negatively affected when you enter debt review. However, it should improve as you make consistent payments and eventually clear your debts.
Making the Most of Debt Review
If you decide to pursue debt review, here are some tips for a successful journey:
Be Honest and Transparent:
Provide all the necessary information to your debt counsellor. The more they know about your situation, the better they can help you.
Stick to Your Repayment Plan:
Once your plan is set up, make your payments on time every month. This is crucial for the success of the debt review process.
Communicate with Your Debt Counsellor:
If your financial situation changes (good or bad), let your counsellor know. They might be able to adjust your plan if needed.
Develop a Budget:
Use this opportunity to learn better money management skills. Create a budget and stick to it to avoid future debt problems.
Seek Financial Education:
Many debt counsellors offer financial education programs. Take advantage of these to improve your money management skills for the long term.
Conclusion
Debt review can be a lifeline if you're drowning in debt. It offers a structured way to regain control of your finances and work towards a debt-free future. While it's not a quick or easy process, many people find that the benefits outweigh the drawbacks.
Asking for help with your debts isn't a sign of failure – it's a smart step towards taking control of your financial future. If you think debt review might be right for you, reach out to a registered debt counsellor to discuss your options.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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BC Supreme Court Ends $1.2M Bitcoin Loan Dispute
Crypto Law | Sep 16, 2024
Image: Freepik/fabrikasimf
B.C. Supreme Court enforces $1.2M Bitcoin loan in a landmark crypto case
The British Columbia Supreme Court upheld a $1.2 million Bitcoin loan arrangement in "Nguyen v. Tambosso (2024 BCSC 1551)", ruling in favour of the lender, Hung Nguyen. Despite the speculative nature of the transaction, Justice Shelley Fitzpatrick upheld the enforceability of contracts using Bitcoin just like those involving traditional currencies.
- Daniel Tambosso received a loan of 22 Bitcoins from Hung Nguyen in 2021 and was expected to pay it back within 48 hours. Tambosso said that the Bitcoin (valued at approx $1.2M) was required for a "bypass procedure" linked to software supposedly designed by Satoshi Nakamoto to secure his digital wallet. He also said if the transaction was successful that Nguyen would be offered a hefty return of 1,750 Bitcoins. After five months without repayment, Nguyen took legal action.
See: UK Proposes Bill to Recognize Crypto as Personal Property
- It was argued by Tambosso that the loan was an investment risk but Justice Fitzpatrick rejected this claim noting that the agreement clearly outlined the obligation to return the borrowed Bitcoins regardless of the outcome of the bypass procedure. The judge further acknowledged the possibility that Tambosso might have been deceived or involved in a some type of scam but regardless this was not an excuse for him to evade his 22 bitcoin repayment obligation. Justice Fitzpatrick noted, “Any risk associated with the bypass procedure was assumed by Tambosso alone.”
- The decision strengthens the legality of bitcoin as collateral and recognizes Bitcoin loans as legally enforceable under Canadian contract law. It also demonstrates the increased legal scrutiny of cryptocurrency transactions, with the court awarding Nguyen more than $1.24 million in damages based on the value of Bitcoin at the time of the loan.
Justice Shelley Fitzpatrick:
“This case involves a modern twist…Bitcoin, despite its volatility, is not beyond the scope of enforceable legal agreements. Any risk associated with the bypass procedure was assumed by Tambosso alone."
Why It Matters
This ruling is a turning point for loans backed by cryptocurrency in Canada and possibly beyond.
See: Key Takeaways from Bitcoin 2024 Conference
It strengthens Bitcoin's legality as a collateralized asset and signals a growing acceptance of digital currencies in legal and financial frameworks. For lenders, borrowers, and the fintech sector, the ruling establishes a precedent that may influence future crypto-loan agreements in the future.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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CFPB Aligning Lending Regulations with Earned Wage Access
Regulation | Jul 22, 2024
Image: Freepik/pvproductions
CFPB Proposes New Earned Wage Access Rules and Implications for Canadian Stakeholders
The Consumer Financial Protection Bureau (CFPB) of the United States has issued new interpretive regulations for Earned Wage Access (EWA) providers. These policies are intended to improve openness and consumer protection in the financial sector. While the new rules are U.S.-specific, there are implications for Canadian stakeholders.
EWA Demand and Regulatory Concerns
The demand for EWA products has grown rapidly due to the rising cost of living, inflation, and financial stress.
See: Redefining Payday: Earned Wage Access (EWA) Insights from Harvard Study
EWA services are either managed directly via an employer's payroll system, which allows employees early access to a portion of their earned wages prior to payday. EWA can also be managed through a third party app or online service (EWA provider), such as AnyDay in Canada, or Payactiv in the U.S.
Over 60% of U.S. workers are living paycheck to paycheck. In Canada, 47% are living from paycheck to paycheck and managing significant debt. A survey by the Federal Reserve Bank of Kansas City found that transaction fees for EWA services can result in annualized APRs of up to 331%, highlighting the need for regulatory oversight.
In 2020, the CFPB issued an advisory opinion on EWA that was an important step in regulating the EWA landscape but it caused regulatory ambiguity around the classification of EWA products as credit.
New EWA Rule Proposed for Comment
The CFPB's new rule specifies when EWA products are considered credit under the Truth in Lending Act (Regulation Z). This regulation applies to all EWA models where money is collected through payroll deductions and refunded by automated bank withdrawals. The new interpretive guidelines provide clear rules that reduce ambiguity, ensuring that EWA products are subject to consistent regulatory oversight.
See: CFPB’s New BNPL Rule for Fintechs and Financial Institutions
The new rule requires all EWA providers to declare any financial costs, including any fees for expedited cash delivery and tips from customers. By requiring clear disclosure of all fees and rates, the CFPB hopes to protect customers from hidden fees and ensure they understand the true cost of early access to their earnings. This transparency is crucial in preventing consumers from accumulating unexpected debt and financial pressure. Read analysis of the new rule from Norton Rose Fulbright here.
How is EWA Different Than A Payday Loan?
| Feature | EWA Services | Payday Loans |
|---|---|---|
| Nature of Advance | Access to earned wages before payday | Short-term loan to be repaid on next payday |
| Fee Structures | Flat fees or small percentage fees for expedited access (e.g., $1.99 to $3.99) | High interest rates and additional fees (APR > 400%) |
| Repayment | Deducted automatically from next paycheck | Lump sum repayment with interest and fees |
| Regulation and Classification | Often not classified as loans; not subject to lending laws until the newly published CFPB rule | Classified as loans; subject to lending regulations |
| Consumer Impact | Helps manage cash flow without creating debt cycles | High risk of debt cycles and financial strain |
Implications for Canadian Stakeholders
Canadian stakeholders must evaluate the potential effects of comparable regulations.
See: CFPB Warns: Billions of Dollars Stored on Payment Apps May Lack Federal Insurance
- Employers providing EWA services should ensure transparency and clear integration with payroll systems in order to comply with potential future laws.
- Financial institutions may need to revise their product offerings and compliance methods to reflect regulatory changes.
- Employees should be educated on their rights and protections under EWA in order to make informed decisions.
- Policymakers can learn useful lessons from the CFPB's approach when developing regulations that balance innovation and consumer protection.
Outlook
The CFPB wants to protect consumers from unanticipated debt and financial distress by requiring complete disclosure of all fees and expenditures associated with EWA services. It's important for Canadian stakeholders to understand the regulatory changes to stay informed and proactively prepare for similar guidance here in Canada while protecting the financial well-being of its workforce.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Fig Financial: Canada’s First Digital Personal Loan Provider
Launch Release | Jul 10, 2024
Image: Freepik tirachardz/personal loan
Fig Financial introduces a fully digital personal loan platform in Canada, with 10 second rapid approvals
With the launch of its services, Fig Financial—Canada's first fully digital personal loan provider—is changing the personal lending market with approachable online solutions. More than 9,000 Canadians have benefited from the company's over $135 million CAD in personal loan funding to date via various partnerships. Fig is now directly available to customers, offering a quicker, more transparent, and safe borrowing experience.
Overview
- In as little as ten seconds, Fig Financial provides quick loan approvals. Unlike typical banks, where the application procedure can take days or weeks, this one can be finished in about ten minutes.
- Users can easily apply for loans at any time and from any location thanks to the user-friendly, entirely digital application process. Flexible loan terms, payback plans, and amounts allow for customization to meet specific needs.
See: How Fintechs Can Integrate AI for Efficiency Gains
- Fig fills a significant void in the industry by offering straightforward, transparent and hidden-free information on loan terms.
- The latest security protocols protect user's data.
- The management team at Fig, led by CEO Francois Cote, has over 50 years of combined expertise in fintech and financial institutions. Fig's dedication to innovation and customer-focused solutions is emphasized by their experienced leadership.
- With competitive interest rates starting as low as 12.99% right now. There are no early repayment penalties, so borrowers who pay off their loans early can save money on interest.
Francois Cote, CEO, Fig Financial:
“We are providing a true alternative to banks for every Canadian who needs better lending options. And we are doing what the banks won’t: making this experience entirely online. If you need to cover unexpected bills and expenses, make home improvements, or pay off your debt faster–whether it’s 3pm or 3am–Fig is available to you.”
See: nesto Acquires CMLS Group, Katipults to Forefront of Canadian Mortgage Lending
Interested in Partnering with Fig Financial to Unlock Revenue?
- According to their website, partnering with Fig Financial gives companies an easy, API-first approach to monetise their existing clientele and draw in new ones.
- Even for near-prime and non-prime consumers, Fig offers flexible lending alternatives thanks to its excellent approval rates and sizable balance sheet, which is supported by Fairstone Bank.
- Automated decisioning, comprehensive servicing and collections, and referral fees on loans are all advantageous to partners.
Outlook
With its quick, open, and safe digital platform, Fig is ready to compete in the sector and provide a strong alternative finance solution from traditional banking.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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