Earned Wage Access (EWA) opponents are spreading misinformation about EWA services. Outdated facts, product misperceptions, and bias threaten workers’ ability to find the information they need to make intelligent choices for their families. The IPA believes employees should play a role in deciding when and how they receive the money they have earned.
EWA Myths vs. Facts
Providing employees with access to wages that they have already earned but have not yet received through the traditional employer payroll cycle is growing rapidly because of benefits for both workers and employers. By offering the option of getting paid more frequently, employers can both attract new employees and retain current employees, which saves the expense of recruiting, onboarding, and training.
On Demand: Earned Wage Access
Fintech companies have developed a financial product that allows employees to gain access to
wages that they have already earned before their scheduled payday. The fee for getting an
earned wage advance is usually small, making this product an extremely attractive alternative to
payday loans—the go-to resource for lower-income Americans for the past three decades.
EWA and the End of Payday Lending
This study builds on the Financial Health Network’s previous research on the topic, which used administrative data from two direct-to-consumer and two employer-integrated EWA providers to understand the frequency of use and average costs for users.
Report: EWA as a Liquidity Solution
Resources
Many households struggle to find the money to pay for day-to-day or unexpected expenses. One of the underlying issues driving these short-term liquidity challenges is a timing mismatch between when people must pay for expenses and when they receive income. This is particularly acute for people whose regular expenses exceed their regular income
Exploring Earned Wage Access as a Liquidity Solution
Fintech-powered earned wage access (EWA) has been gathering momentum for nearly a decade, enabling cash-strapped workers to receive a portion of their wages before the usual biweekly payday through digital channels. In that time, EWA has become a hotbed of innovation as fintechs continue to increase the speed and convenience of receiving funds.
Five Innovations in Earned Wage Access
In November 2023, the Consumer Financial Protection Bureau took the unusual step of filing a comment letter for a state-level rulemaking in California regarding earned wage access, in which the CFPB urged California regulators to move forward with proposed regulations that would effectively deem all EWA services to constitute the offering of "credit."
Decoding the CFPB's Puzzling Position on EWA Programs
Additional Articles on Earned Wage Access
“Attempts to regulate EWA as credit threatens worker access to this innovative and consumer-friendly financial tool,” writes one earned wage access industry CEO.
Additional Articles on Earned Wage Access
“Employers, benefits platforms, regulators, and employees are paying more attention to earned wage access (EWA) products for their potential to improve employee financial health. Employers can maximize the positive outcomes of EWA products by minimizing associated fees, explaining the program mechanics to employees, and providing a complementary suite of financial resources.”
Additional Articles on Earned Wage Access
“EWA is one tool that can help smooth out income volatility. IPA and its member companies are concerned that regulators could unintentionally harm the consumers they are trying to protect if they create rules that impede access to this important liquidity tool.”
Additional Articles on Earned Wage Access
“The CFPB has previously explained why certain EWA programs are not credit and should not be treated like credit.”
Additional Articles on Earned Wage Access
“Nearly 34% of employees in America want access to their wages as they earn them rather than waiting for a traditional payday, according to the results from the 2023 “Getting Paid In America” survey. ”
Earned Wage Access Articles
"People are running out of money faster. Which is why more employers are discovering that although the amount of compensation paid to their employees is important, there’s something that’s quickly becoming just as important to many of them: when they’re paid."
Additional Articles on Earned Wage Access
“Additionally, in gathering information from its EWA members, the IPA has collated research that shows that on average 63% of EWA users say that it allows them to reduce their use of payday loans, and 55% say they overdraft their bank accounts less often.”
Additional Articles on Earned Wage Access
"Earned Wage Access or on-demand pay is a nobrainer. Employees get access to their earned wages whenever they need them, instead of having to wait until payday. That way, they don’t need to rely on taking out payday loans or deal with unnecessary late fees. And it works."
Additional Articles on Earned Wage Access
"The new research is very encouraging and validates our efforts to empower workers with choice and control of their earned income," said Gino Palozzi, Chief Marketing Officer at DailyPay.