Digital banking platform Dave said customers are increasingly turning to its ExtraCash offering.
Originations for the cash advance program reached $1.2 billion for the company’s most recent quarter, up 37% year over year, according to a Tuesday (Aug. 6) earnings press release.
CEO Jason Wilk said during a conference call with analysts that the growth was driven by Dave’s “cash AI underwriting engine and [reflected] strong continued demand for extra cash coming out of the seasonally softer tax refund season in Q1.”
“The average customer at a major bank is still paying $300 to $400 a year just to maintain a basic checking account, due to overdraft and minimum balance fees,” he added. “You switch to Dave, and all those fees go away.”
Speaking with PYMNTS CEO Karen Webster for a June report, Wilk described his company’s typical client as a consumer who perpetually finds themself struggling.
“They’re living paycheck to paycheck, and things have always been expensive for these consumers,” he said at the time.
They live in households earning between $25,000 to $60,000 per year, with rising gas prices and other daily expenses chipping away at their disposable income.
The PYMNTS Intelligence paycheck-to-paycheck report “Why One-Third of High Earners Live Paycheck to Paycheck” found that 65% of these consumers live paycheck to paycheck, with less than 40% saying they were anticipating wage increases this year.
Typically, Wilk said Dave’s consumers have used short-term credit options — payday loans, for instance — to make ends meet. However, the avenues to credit are narrowing, with even subprime credit companies moving into “risk off” mode.
“Credit scores are not helping these customers get approved for a credit card right now,” Wilk said.
Meanwhile, Wilk on Tuesday also addressed a proposal from the Consumer Financial Protection Bureau (CFPB) that would classify paycheck advance and earned wage access (EWA) products as consumer loans.
“If it were to become effective, we feel very strong in our position as an overdraft product similar to traditional banks, albeit at significantly cheaper fees,” Wilk said during the call. “And if the rule were to pass, yes, I agree that it could squeeze some players out there that are continuing to offer unlicensed credit that is not regulated. Dave is a federally regulated overdraft product, and we spent a lot of time developing and building our business in a very compliant way leading up to going public.”
