Earned wage access (EWA) is expanding platforms, including the eCommerce and ridesharing mainstays that rely on drivers for deliveries and trips, and the FinTech providers that offer enterprises new financial capabilities.
In some cases, letting users get an advance on their pay comes via acquisition, and in other cases, the move has been done through partnerships that build out the range of services accessible via the platforms.
The PYMNTS Intelligence report “No-Wait Wages: Leveraging Instant Payments to Boost Employee Satisfaction” found that the option for on-demand disbursements holds particular appeal in the current economy, where roughly two-thirds of consumers live paycheck to paycheck. About 83% of individuals want to have more frequent pay schedules, moving beyond the confines of the traditional biweekly pay schedules that have been in place for decades. Three-quarters of gig economy workers said that they want to be paid more frequently.
On the employer side of the equation, nearly half of businesses said they must contend with staffing shortages. Against that backdrop, offering payroll instantly and on-demand can be a competitive advantage.
PYMNTS found that 75% of millennials said earned wage access availability would influence their acceptance of a job offer. Additionally, 96% of corporates that offered earned wage access said their employees liked it and the offering helped attract talent.
The PYMNTS Intelligence report “Measuring Consumer Satisfaction With Instant Payouts” found that 77% of consumers opt to receive instant payments for income and earnings disbursements.
At the same time, the regulatory landscape is changing for EWA. In July, the Consumer Financial Protection Bureau proposed a new classification for paycheck advance and earned wage access products through a rule that would classify paycheck-related offerings as consumer loans. Under the new rule, these lenders would have to disclose more information to borrowers, more extensively detailing fees, interest and the total costs inherent in accessing wages early.
A report released in tandem with the rule announcement found that for employer-partnered firms, the average transaction amount ranged from $35 to $200, with an overall average transaction size of $106. The average worker accessed $3,000 in funds per year.
It’s widely known by now that the fate of the CFPB, in terms of how the agency might be reshaped under the incoming presidential administration and new Congress, remains unclear. That lack of clarity extends to new rules.
However, in other areas, EWA is getting a closer look at the state level. Last year, Nevada became the first state to license EWA providers, requiring those firms to obtain a license to operate. (In Nevada, services are not considered loans.) Missouri also regulates EWA within its borders. Other bills have been introduced in Arizona. Florida passed legislation this year.
As for the expansion of providers and platforms, Fiserv said this week it is acquiring EWA provider Payfare. Payfare’s offerings from Payfare combined with Fiserv’s expertise in processing, bank ledgers and integrated value-added services, enhance the Fiserv solution in embedded banking, payments and lending.
In August, ridesharing platform Lyft expanded its offerings with earned wage access for drivers, powered by Payfare and tied to its Lyft Direct debit card. Uber’s Instant Pay feature allows drivers to “cash out” their earnings up to a half dozen times daily.
Elsewhere, Amazon invested another $2.1 billion in its Delivery Service Partner program in September. The investment will help support the launch of a new earned wage access offering for DSPs from PayActiv. It will allow drivers to access up to half of their accrued wages before payday.
Marqeta said in April it was expanding its earned wage access program with assistance from financial wellness provider Rain. The company said its platform would power the Rain Card, a branded debit card that lets employers disburse earned wages onto the cards.
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