A Toronto fintech offering bank accounts that get gig workers paid faster plans to use the money from its “massively oversubscribed” initial public offering to fund ambitious expansion plans, with one pilot already underway.

“It’s not just large workforces that represent the gig economy [that] we would target,” said Marco Margiotta, chief executive officer at Payfare, in an interview with The Logic. “There’s other areas of opportunity where our same business model can be applied.”

Payfare’s clients include gig-economy companies like Uber and DoorDash. It provides their workforce with a payment card, digital bank account through which they can get paid faster than they can through other banks or third-party services. It also offers rewards, such as cash back on delivery drivers’ gas purchases.

The company’s shares started trading on the TSX last month after it completed a $65-million IPO, with common shares priced at the top of its initially expected range. Last week, Payfare announced its total gross proceeds rose to more than $75 million after its underwriters exercised their over-allotment option in full. While its share price has dipped briefly below the $6 mark, it has been on an upward trajectory in recent weeks, closing at $7 on Monday. 

Payfare went public amid a tech-stock frenzy that saw several other Canadian companies, including MindBeacon and Telus International in late 2020 and early 2021, respectively, list with upsized offerings. The market has since cooled, with Canadarm maker MDA falling 20 per cent shy of its target raise and Vendasta Technologies reportedly considering downsizing or scrapping its planned offering.

The pandemic has been both a hindrance and a boost to Payfare’s business model. Initially, Margiotta said, it had “a significant impact on our business to the downside, given that when the pandemic first broke 100 per cent of our business was actually a derivative of ride share,” a business that “completely got cratered” as authorities encouraged people to stay home. But other gig-economy businesses—such as DoorDash, which Payfare added as a client in late 2020—experienced the opposite as consumers turned to online delivery.

After the IPO, Payfare first repaid all its debt, said Margiotta. It paid back about $21.5 million in short-term debt in late March, according to its financial filings. The company intends to use much of the remaining proceeds to further develop its platform as it expands outside of North America and into new verticals.

Margiotta said Payfare’s already looking at offering its services throughout the United Kingdom and other parts of Europe, then Australia and parts of Latin America. Those expansions would be with both existing and new clients, he said.

The company’s ambition stretches into other services and even beyond the gig economy. In early marketing filings, Payfare suggested it could provide its services to companies as diverse as pet-services booking platform Rover, car-sharing company Turo, home-rental giant Airbnb and grocery-delivery company Instacart. It highlighted truckers, social media influencers and e-commerce merchants as potential new sources of growth. Recent additions to Payfare’s board may hint at its future, as well. In late March, it announced three new directors, including the CTO of Booking.com and the co-founder of a last-mile logistics company.

Payfare started a trial run about a month ago to see how independent truckers could use its platform, said Margiotta. It partnered with an undisclosed Dallas-based company; about 100 users are testing a version of the service. “We move as fast as they can move,” he said, adding that the pilot is well underway. “We would look to have sizable movement there towards the end of this year, early next year.”

Margiotta sees independent contractors like truckers as “the smallest form of small business” and also expects Payfare to target the next level up: small mom-and-pop shops that turned to e-commerce amid the pandemic. “It’s just good timing to think about merchants on Etsy, eBay, Shopify, Amazon—any e-commerce merchant that’s on one of those bigger platforms.” Payfare could partner with Etsy, for example, and determine what a seller earns in real time and pay them out at the frequency the platform prefers, said Margiotta.

One possible challenge to its core business, though, may come from increased scrutiny of how companies treat gig-economy workers. British company Deliveroo faced backlash as it moved toward a $3.07-billion initial public offering on the London Stock Exchange. The company’s shares plummeted during their stock-market debut and continue to stay below their offering price.

One key question surrounding these workers’ rights is whether they should be classified as employees over independent contractors. Courts in several jurisdictions have grappled with the issue. In February, the U.K. Supreme Court upheld a lower-court ruling that 25 former Uber drivers were entitled to minimum wage and other rights shared by workers. Uber reclassified its 70,000 workers there the following month, guaranteeing they’d be able to earn at least the national living wage, and be entitled to benefits like vacation pay.

In the U.S., the question has been tested in the courts as well at the ballot box. In California, voters approved Proposition 22 last year, which gave many of these companies the ability to keep workers classified as independent contractors. It is facing a constitutional challenge.

Margiotta doesn’t believe any widespread rulings in favour of workers would impact Payfare’s business model. Users will still need instant payments, he said. “Irrespective of how they’re classified, our product and our service offerings will still be there.”