Earned wage access (EWA), also referred to as instant pay, earned income, early wage access, accrued wage access or on-demand pay, is a financial service that allows employees, especially low-wage and hourly workers, to access a portion of their accrued wages before the end of the regular payroll cycle. The official UK government term is Employer Salary Advance Scheme. [1]
Earned wage access technology can be implemented in various ways: automatically loaded onto a prepaid card, deposited via ACH onto a user's existing direct deposit, or, in a bifocal approach, accrued earnings are transferred into a bank account facilitated by the EWA provider.[ citation needed ]
EWA providers have been positioned as an ethical solution to payday lenders as they typically charge a small flat fee rather than interest, and there is no recourse, credit impacts, or underwriting in earned wage access transactions. [2] Criticisms include that EWA is similar to payday lending, and that if earned wage access providers are exempted from lending laws and governed by an independent set of rules, providers can potentially evade consumer protection regimes. [3] It can also result in a cycle of dependence, where once a person requests EWA, their following paycheck is smaller due to having to repay the initial amount, resulting in an increased likelihood of needing EWA again. [4]
In the United States, 20% of all hourly staff are expected to be paid this way by 2023, [5] with many large employers like Walmart and McDonald's already offering it. [6] Fees from EWA providers in the United States can also result in an effective APR exceeding 100% for employer-sponsored products and 330% for direct-to-consumer products. Concrete regulation of EWA at the national level also remains forthcoming. [7] [8]
Earned wage access programs began to reach the market in the 2010s, due to the receding number of Americans who had access to credit and traditional banking. By integrating with payroll, these promised to usher in a fairer and more inclusive era of personal finance.
In August 2016, Uber pioneered EWA in a partnership with Green Dot by allowing drivers to request their earnings after each drive in exchange for a small payment. [9]
In December 2017, Walmart introduced Earned Wage Access (EWA) for its 1.4 million U.S. associates. Expanding on this initiative, Walmart partnered with Payactiv to offer a new service that allows users to access their earned wages in cash at any Walmart store. [10]
In July 2018, ADP, the largest payroll provider in America, began offering an EWA solution in their marketplace. [11]
In May 2019, Lyft introduced a similar feature to its drivers in a partnership with Mastercard. [12]
Theoretically, 'EWA' has even more potential in the UK where the typical pay cycle is monthly, [13] rather than bi-weekly as is the case in the US.
In August 2021, FTSE 100 accounting software company Sage Group entered the UK earned wage access market by introducing an EWA feature within its payroll platform, marking one of the first major business software providers to adopt the model. [14] [15] [16]
As recommended by the Financial Conduct Authority, the UK’s leading providers of earned wage access and on-demand pay have come together and created the world's first EWA code of practice. [17]
As earned wage access exists today, there are two distinct models. In the employer-integrated earned wage access model, if an employee accesses their earned wages ahead of payday, EWA transaction is adjusted from an employee's paycheck on payday.[ citation needed ]
In the direct-to-consumer model, users will still receive the entirety of their paycheck at the end of each payroll cycle. At the end of each payroll cycle, however, the advancements made to the user are subtracted from the direct deposit account noted on the user's payday. [18] New laws in Nevada and Missouri protect users from potential overdraft risks in this model. [19]
Earned wage access is promoted as bringing income more inline with expenses, helping workers to avoid cash flow issues that could result in them taking out more expensive traditional payday loans. [20]
There is also a moral argument made by some[ who? ] that, instead of employers benefiting from the cash flow advantages of paying in arrears, staff are entitled to the pay they've already earned.
Many earned wage access providers also highlight the benefits to the employer, including quicker recruitment, better staff retention, a more motivated workforce and a greater staff appetite for overtime and extra shifts. Marketing claims vary across the industry, from reducing staff turnover by 50% [21] to increasing shift uptake by 26%.
In the United States, EWA fees can equate to a total APR in excess of 100% for employer-sponsored products and 330% for direct-to-consumer products. [22] [23]
Monica Burks, of the Center for Responsible Lending, warns that, "[t]he industry is trying to create a new definition for what a loan is in order to exempt themselves from existing consumer protection laws." [24]
States in the US such as Nevada and Missouri have regulated earned wage access providers by creating a new earned wage access license and required them to be licensed. [25]
In the UK, the government is broadly optimistic about the sector and appears to be encouraging take-up. [26] This is possibly in response to several think tanks and charities throwing their reputation behind the concept. [27]
In April 2025, New York Attorney General Letitia James filed a lawsuit against two companies offering earned wage access products, alleging that they were effectively providing illegal payday loans under state law. The lawsuit argued that the providers charged workers unlawful interest rates and fees while marketing their products as a safer alternative to payday lending. The Attorney General’s office claimed that these practices exploited workers and violated New York’s lending and consumer protection statutes. [28]
Consumer risk is highly dependent on the specific strategy the EWA provider chooses to take when offering the advances. Some users have been forced into overdraft as they were allowed to advance more than they received in their paycheck. [29] Most reputable providers cap advances well below total income and charge a flat fee.
EWA providers are held responsible for recollecting the advances they make the consumers. As such, they face risk if they advance too much to the user and risk the user defaulting. All in all, however, EWA providers face dramatically lower risk than other credit providers as the advances they make are backed by hours the loan recipient has already worked towards. [30]
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