Fintech companies have been disproportionately affected by the COVID-19 pandemic, with many that do not meet the criteria for government relief now facing the prospect of layoffs and potentially closing up shop.

At issue is the government’s wage subsidy, which is “inadequate” to meet the needs of fintech companies and start-ups.

“The wage subsidy requirement for turnover to decrease by at least 30 percent from March 2019. means fintech companies that have high growth or those that have not traded for 12 months cannot qualify for a wage subsidy,” FinTech Australia wrote in a Senate submission. “In terms of a high-growth business, a 30 percent drop in turnover represents a figure higher than 30 percent.”

FinTech Australia, which represents over 300 Australian start-ups and fintech companies, offers the use of bridging funding tied to a two-year repayment timeframe and on the condition that the business does not lay off staff, and the outsourcing of government R&D incentive payments.

"The time to act is now to prevent irreversible market shock in the fintech sector," writes FinTech Australia. "Anything the government can do to maintain confidence, support investment and keep people in jobs in the fintech sector during the crisis is key to maintaining the upward trajectory of increased competition in the banking sector."

FinTech Australia offered a number of examples of businesses that did not meet the subsidy criteria, including one with 160 employees that may not be eligible because it had not traded 12 months ago. The business has asked all its staff to take a 20 per cent pay cut to minimize short-term redundancies. Another member—an enterprise software company that generates revenue through annual licensing deals—expects its revenue to decline unevenly over the year, making it more difficult to apply for a grant.

"Australia will not be the first to take such measures," said Rebecca Schott-Guppy, GM of FinTech Australia. “We are proposing steps that have been taken in the UK and Singapore. We welcome a serious discussion with the Government about how to ensure that fintech and other innovation industries contribute to Australia's economic recovery and also create jobs for more Australians.”