Financial wellbeing app Wagestream under scrutiny for high interest loans to low paid workers

Low paid employees at major UK organisations including Asda and Pizza Express are being presented with the option to borrow significant sums at hefty interest rates via the financial wellbeing app Wagestream. These loans, which can reach as high as £25,000, are being offered at representative annual percentage rates (APR) of between 13.9% and 19.9%, with the ceiling set at 34.9% depending on employer negotiations.

The app, heralded as an employee benefit, has already made inroads among large household names. Notable brands such as Superdrug, Domino’s, Halfords, Schuh, and several NHS trusts have partnered with Wagestream, although the extent of loan offerings remains unclear. The firms themselves neither supply the funds nor profit from commissions, positioning Wagestream as the key player.

Wagestream’s suite also includes budgeting tools and savings pots aimed at helping workers manage their finances more effectively. According to the provider, these services form a more ethical alternative to other high-cost lending solutions, with many users previously encountering average APRs upwards of 62% from rival lenders. Social impact investment has played a role in Wagestream’s growth, with support from the Joseph Rowntree Foundation and the Fair by Design Fund.

Despite the app’s intention to provide relief, critics argue that it may inadvertently deepen debt cycles for those already financially vulnerable. Salary advances and loans can be easily accessed via a simple online form, with funds arriving in as little as two hours. Repayments are typically deducted straight from wages, a feature that ensures prompt repayment for the lender but could put pressure on workers’ monthly budgets.

Concerns have been raised by debt charities and unions over the ease with which workers can fall into borrowing patterns, especially when struggles with basic expenses prompt borrowing as an immediate solution. The GMB union, representing thousands of Asda staff, stressed the need for better pay rather than greater access to high-interest credit. There have also been calls for closer alignment between such lending services and the real needs of employees.

Both Asda and Pizza Express acknowledge the voluntary nature of Wagestream’s loan services, emphasising that affordability assessments are conducted in line with FCA regulations. While responsible lending practices and robust checks aim to provide a safer environment than traditional payday lenders, questions persist over the long-term impacts on workers’ financial resilience.

Backing from social impact investors offers some reassurance that Wagestream could serve as a lifeline for those excluded from mainstream credit, providing a less damaging option in periods of hardship. Nonetheless, debate continues over whether such products are a symptom of wider systemic issues, namely low pay and inadequate social safety nets. Until broader reforms are in place, responsible access to credit will remain a vital concern for employees and advocates alike.