Dive Brief:

• Rain, the employer-integrated earned wage access provider, has raised $75 million in equity funding, according to a Tuesday press release.
• While Prosus led the funding round, additional investors included Nextalia Ventures, Spark Growth Ventures, QED and Invus Opportunities, also participated in the round, the release said.
• The funding will support Rain’s efforts to scale and create more employee financial wellness and employer-centric services. Later this year, the company plans to introduce new savings and credit products as well as an employer messaging tool, per the press release.

Dive Insight:

The funding round comes as no surprise given that its CEO, Alex Bradford, said last summer that Rain planned to raise more funds to develop more services, expand its partnerships and grow its sales team.

Nearly a year later, Rain’s investors continue to pour capital into the emerging earned-wage access business. Prior to this recent funding round, the company sourced $300 million in debt financing in February 2024 from Clear Haven Capital Management in a credit facility, per a press release at that time. Rain also raised $66 million in equity investments, and landed $50 million in debt financing, in March 2023, per the release this week.

Since starting up the business in 2019, the company has connected some 2.5 million workers to its services and distributed more than $2 billion in wage payouts, according to the release. The company also touted its alleged impact on employee retention. 

“Thanks to the support from Prosus, Nextalia and other investors participating in this round, Rain is in a strong position to scale to thousands of new employers and millions of new employees across the U.S,” Bradford, who is also Rain’s co-founder, said in a statement.

Beyond raising more money and enhancing its own platform, Los Angeles-based Rain recently teamed up with a key partner: human resources services company Workday. Through the collaboration, Workday’s corporate clients can use Rain’s services to offer their workers payouts ahead of payday via ACH for free, or instant payouts for an extra fee. 

As Rain has grown its EWA business, the industry has faced more regulatory scrutiny at the federal and state levels. Last month, Arkansas and Utah passed early wage access laws implementing some restrictions on the industry. Both pieces of state legislation require EWA companies to disclose their fees and offer at least one of their services for free. 

The Consumer Financial Protection Bureau last year issued an interpretive rule saying it deemed some EWA services to be loans that should be subject to lending laws, but under President Donald Trump that rule is less likely to be pursued as his administration reduces oversight.

Meanwhile, research from the Center for Responsible Lending suggests that a subset of customers rely heavily on EWA transactions. Frequent EWA users make up nearly four in ten users, but they comprise almost 90% of wage advances, according to the advocacy group’s report released last fall. The report suggested some users may incur more overdraft fees related to their other financial services as their EWA use rises.