Already popular in the UK and US, earned wage access is offered by companies to their employees as a staff benefit – and allows their workers to choose when they’re paid.
It is not a loan, but enables users to pay a small ATM-style fee to access a portion of the wages they’ve already earned.
Here, in a question and answer session, Furman explains the details.
Can you explain what earned wage access is and how it works.
Earned wage access (EWA) is a B2B2C technology solution offered by companies to their staff which provides workers with the ability to access their earned wages on an on-demand basis, at any time during the month, as opposed to having to wait weekly/fortnightly or monthly for their payday.
The technology plugs into the company’s payroll and time and attendance software to access real-time information on the hours and days worked.
How is this better than what is already available with pay in advance?
“Pay in advance” products are essentially a tech-enabled payday loans, who disguise themselves as a healthier, On-demand pay alternative. However under the hood, they are all just consumer loans packaged differently. The amount users can withdraw is not directly linked to a user’s earned pay, but rather their historical pay. They charge 5% on the amount requested and the provider direct debits the user for the money back, on payday – it’s a pure unsecured, B2C consumer payday loan. In the event that their direct debit is rejected due to insufficient funds in the user’s account, the lender would then typically commence collection action which risks putting them into a deeper state of debt and having a poor credit history against their name.
Click here to find out more about Earned Wage Access as an employee, or click here for an information page to send to your employer.
