Comment by karinaderbez | Hacker News Reader

Comment by karinaderbez | Hacker News Reader

Hi HN, we're Karina and Andres of Monto (https://www.monto.mx/). We give employees of our affiliated companies access to their earned wages 24/7. We're currently operating in Mexico.

With Monto users can pay for basic services (like water, electricity) on time, avoiding penalties. They can stop paying overdraft fees and avoid having to resort to abusive credit alternatives like shark loans, employer loans, payday loans, credit cards, bank loans, department store credit cards, pawn shops. The conditions on these options are abusive and prohibitively expensive for low-income workers and have resulted in serious financial stress for millions of people.

Andres was working in investment banking in New York, but ended up back in Mexico for a while working on the family business and advising some friends with their business. Through these experience he was shocked to find out: 1) The level of indebtedness that low-income workers had in Mexico. 2) Companies were not offering benefits that promoted financial wellness in most cases they were offering problems that exacerbated the problem. 3) The lack of transparent, low cost, easy-to-use financial products in the market. He decided to move back to Mexico after living abroad for 12 years, and start a company that would fix this for people.

Users have immediate access to their earned money with Monto - we deposit the money in 2 minutes into any bank account. Withdrawals are secure and confidential. Users don't need to fill out an application, provide documentation or fulfill a long list of requirements – any employee of our affiliated companies can use it. Users pay a small fixed charge per withdrawal, regardless of the amount. There are no interest payments or hidden fees. In contrast to other alternatives, we don't perform credit checks and usage of Monto cannot affect our users in any way (e.g. credit score).

> Users pay a small fixed charge per withdrawal, regardless of the amount.

Really disappointed to read this. Wages are so low that working people can't pay their bills, so your solution is to lower their wages even more? There was another YC company like this but they were charging the company, not the employees. You may not be a loan shark, but you are enabling the company to pay low wages and offloading the cost of mitigating the problem to the already-exploited. This is ethically dubious, at best

Agree with you. If Monto only works with 'affiliated companies,' at least strike a deal with those companies to take the financial burden off of their low-wage employees. That other YC startup Payflow (that was actually ripping off UIs, to their detriment) proved it to be possible.

Employers or users can pay the withdrawal fee, that's up to the company. We encourage companies to offer it as financial benefit. Regardless, users love our product and see a lot of value in getting the flexibility to decide when to get paid. In contrast to other options in the market there are no interest payments or hidden costs.

I can see how in the short term it's a positive service - they can now keep their lights on, their water running, etc.

But as a long-term proposition, a permanent adjustment to the status quo, it just feeds into an exploitative system in the same way that loan sharks do. You're filling a gap that should be filled with higher wages, and reducing wages from the most-vulnerable to do so.

I agree with your sentiments, loan-sharks gunna loan-shark....

Though, if there is a good lining here, its not the retarded interest rates check-cashing and pay-day loan places charge... and thusthis seems a step in the right direction...

Although, I am also reminded of MONDO.COM

YOU CAN DO ANYTHING AT MONDO.COM!

THats what this BSP sounded like...

----

I wish them well though.

You're arguing for reducing options for people who don't have money to ... make yourself feel better? Surely them having an option to choose for themselves is better than no option, unless you think you know better than them (which would be pretty arrogant and small-minded of you IMO).

To be fair to the GP, your video does say "Sin costo para su empresa", so that sounds like the route Monto is pushing.

I think it is very predatory. You guys are "changing the world" (for the worse). We should encourage people to save not to borrow money with interest and spent. They will get poorer and poorer and can never get out. You are taking advantages of poor people. So I hope you fail.

People who are not making enough money to make ends meet -- and thus end up with overdraft fees or having to make use of things like instant loans or credit cards -- don't need to get paid faster. They need to get paid more.

Whether they can afford to live or not is a matter of simple arithmetic: money left = money made - expenses. Being able to tap into their underwhelming income faster to cover a mid-month bill doesn't help them in any way, it just pushes the problem around, so that come payday, they will have even less and have to repeat the same process.

This product is only less distasteful than text message money lenders because it doesn't come with exorbitant interest rates. This product isn't helping anyone. It's just capitalizing on the poor.

> People who are not making enough money to make ends meet [...] don't need to get paid faster. They need to get paid more.

Or they need to pay less. If the cost of being poor represents a significant fraction of the total spending for these people, lowering that through arbitrage is still a benefit.

I mistakenly went negative once on one of my bank accounts (purely due to sheer laziness/inattention), I was amazed by how expensive that small mistake was. People who are unfortunate enough to have than happen regularly spend a lot on those fees, especially compared to their almost non-existent disposable income. Anything that can help/reduce those expenses is a win in my book.

You're neglecting the fact that they will also have expenses the month after, and the month after that. Tapping into their income faster just means that this month's bill gets covered by their salary, but next month's bill goes on credit.

If anything, this product is bad like credit cards and overdrafts, in that it will enable people to make financially unsound decisions while feeling like they can actually afford it, when they can't. They're just burning the candle at the other end.

For ease of numbers, let's say you make $100/week and have to spend $90/week on personal expenses.

If you get paid once every 2 weeks, you have: Week 1: -$90 Week 2: +$20 Week 3: -$70 Week 4: +$40 Week 5: -$50 Week 6: +$60 Week 7: -$30 Week 8: +$80 Week 9: -$10 Week 10: +$100

So it takes you 9 weeks before you never go negative and to be able to afford to take the job, you need $90.

If you get paid everyday, it's: Week 1: +$10 Week 2: +$20 Week 3: +$30 Week 4: +$40 Week 5: +$50 Week 6: +$60 Week 7: +$70 Week 8: +$80 Week 9: +$90 Week 10: +$100

It's clearly nicer to get paid everyday all else being equal.

Yes, you're absolutely right. If we set up a perfect example to support your arguments, and we ignore any possible negative aspects, then we can conclude that this is a purely beneficial arrangement.

Look, I'm not arguing that it can't be useful to have the ability to get paid daily sometimes, but I don't buy into this schtick about this company doing this in some attempt to help the poor, because literally the opposite is happening.

A more realistic picture goes something like this:

In the middle of the month with only $200 in your account, you get hit with a $400 car repair bill. Instead of having overdrafts or text message money lenders, you can now borrow from your future salary via this company. You do this, cover your bill.

Now it's $next_month and you just got paid $400 less. If you were $200 in plus in the middle of last month, it doesn't seem far-fetched that you'll be in a similar situation this month, which means you're already at -$200, but you just don't know it until the middle of the month.

So what do you do now? Do you borrow from your salary again and repeat this process? Maybe, but then go back to step 1.

An interesting related tidbit is the fact that poor people are actually more likely to make bad financial decisions(and health and etc) and there are numerous studies showing this.

The only thing this product is doing is handing the poor yet another instrument to create financial trouble for themselves, under the guise of helping them. I can also frame it like this: How is this any different than if this company instead just offered "no nonsense loans" at only a 2% interest? Hint: There is zero difference, except in terms of risk for the company. The genius of this arrangement is that they never have to worry about people not paying off their loans.

I think your last point makes your true beliefs clear. You believe it's better for the poor to have a forced savings account (or as I call it a loan to the employer) so that they can't "make bad financial decisions". It's extremely paternalistic to believe the poor shouldn't have immediate access to all of the money they've earned or at least a choice of when to do so.

Of course there should be legal limits as to what interest rate can be charged. I don't believe anything more than 10% on an annualized basis can be justified.

In any case, the vast majority of your points in this discussion are irrelevant and the most potent point you make seems to depend on either interest rates not be fair or the poor being too irresponsible to get their deserved cash.

No, I think the poor should have as many choices as everyone else.

My "true beliefs" are that this company isn't some kind of altruistic attempt at "helping the poor" - this is just a way for this company to capitalize on the poor in the same way any other predatory payday loan company might, except they can do it without running the risk of not getting paid.

I think this is a pretty extreme take and probably not fully warranted. I do agree that the bigger problem is enough money not the same money sooner.

It is kind of messed up though that you put in work and then your employer decides to pay you 1 or 2 weeks later. As an employee, you're essentially giving a short term loan to your employer. You also carry the risk for whatever reason they wouldn't be able to cover payroll. Floating a week or two of personal expenses may not sound like a lot but if you're living pay check to pay check it can be a ton.

Is this idea going to significantly change workers' rights and standing? Absolutely not. Is it poverty profiteering? Probably not.

Reply on news.ycombinator.com