Inside Joust’s subscription model for freelancers
Joust, a digital banking startup geared toward freelancers, is differentiating itself by offering faster access to earned income.
“The pain points [for small businesses] are not banking. Plenty of apps do that well,” said Lamine Zarrad, CEO and co-founder of Joust. “It’s payments, invoicing and de-risking the payment transactions.”
Joust, which launched a beta version of its app last year before launching a new version this week, offers a business bank account for freelancers, but the startup sets itself apart from competitors through a feature called PayArmour. The tool guarantees payments to freelancers using the app, either instantly or in 30 days, depending on how much of their income freelancers are willing to pay Joust.
PayArmour provides freelancers the payments owed by clients, offering half of the payment instantly, if the total invoice is less than $5,000. However, the service costs 6% of the payment, and freelancers must wait for their clients to pay before receiving the other half. For a 1% fee, Joust guarantees payments of less than $2,500 in 30 days.
Zarrad said the feature for invoice payments is unique in the market, with comparable offerings charging as much as 15%.
He noted that PayArmour gives freelancers more liquidity, a plus for workers who receive irregular income from clients who don’t always pay their invoices on time. The feature is embedded into Joust’s invoicing tool, so before freelancers send an invoice to a client, the app will ask the recipient if they would like to use PayArmour.
The platform also offers clients a step-by-step invoicing feature through which freelancers can add client contact information and export invoices in PDF format. Joust customers can also set up savings subaccounts to set aside funds for taxes and other purposes, and the platform can link to external bank accounts.
Customers can pay $10 a month for the “Pathfinder” version of the app, which doesn’t include PayArmour or free payment processing. For $20 a month, customers can access the “Founder” package, which includes PayArmour and free payment processing. PayArmour fees are charged in addition to the $20 subscription.
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The company launched a public beta of its app in January 2019, with certain features, including PayArmour. Zarrad said Joust has about 4,000 business clients using the platform. In 2020 the company aims to launch peer-to-peer payments, direct deposit and remittances.
Joust faces competition from other digital banking platforms catering to freelancers; Oxygen, Azlo and Novo all serve freelance workers who have felt overlooked by traditional banks. Carlos Carvajal, chief marketing officer at the app-building company K2, previously told Bank Innovation that incumbent banks could easily build similar products for small-business clients.
Austin-based Joust was founded in 2017, and has raised $2.6 million in seed funding. Its banking partner is Kansas City-based nbkc bank.
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