Imitation: The Sincerest Form of Flattery

Definition: To resemble the original

READ MORE

New Fintech Products
Flood The Market

As Earned Wage Access established itself as a must-have benefit for competitive businesses, many new fintech products emerged with a goal of limiting predatory practices in the banking industry, with some even focusing on helping low-income and underserved groups. 

Promising developments include products that track and manage food stamps, build emergency savings outside of retirement accounts, and protect against overdraft fees. These products complement EWA to help employees reach their financial wellness goals.  

The creation of EWA has also inspired other products including the rise of “early pay,” where banks offer bank check deposits two days early, cutting out payment processing times once deposit notifications arrive.

Risky Advance Pay Models

Other companies market advance pay directly to the consumer, called “direct-to-consumer advance”. In this model consumers represent their earned wages (such as through geolocation data or based on direct deposit history), seek an advance payment, and their bank account is debited on their self-reported payday. This is considered Direct to Consumer Advance Pay and comes with risks of overextending consumers across multiple platforms and incurring overdraft fees. Employees would be better served asking their employer to offer an Earned Wage Access program benefit.

As more “advance pay” related business models emerge, regulators at the state and federal levels are taking a closer look at regulations in these areas to ensure consumers are protected.

How we are different

The Goal
Find a way to provide accessible & user-friendly financial advice.

What We Said No To
Charging our users extra for having questions about their financial wellness goals.

What We Said Yes To
Offering FREE 1:1 Financial Coaching through the Payactiv app.

The Goal
Create the most accessible way for workers to access their earned wages before payday.

What We Said No To
Charging transfer fees to access earned wages and limiting when a user can access their earned wages.

What We Said Yes To
Fee-free Earned Wage Access, bank transfer options, and EWA-powered Uber Rides, Amazon Load, & Bill Pay.

The Goal
Make saving money and budgeting a smooth & enjoyable process.

What We Said No To
Only focusing on providing one benefit to workers, without thinking about the long term benefits and consequences of accessing earned wages.

What We Said Yes To
Incorporating user-friendly budgeting and savings tools that connect with Earned Wage Access to eliminate friction in a user’s financial wellness journey.

The Goal
Empowering employers to customize Earned Wage Access for their employees financial wellness.

What We Said No To
Deciding what percentage of earned wages employers should offer their employees, without understanding their unique needs.

What We Said Yes To
Customizable Guardrails that employers can execute with support from the Payactiv team on how.

The Goal
Ensuring our Earned Wage Access model benefits the most amount of people.

What We Said No To
Requiring employees to have a bank account to benefit from our service.

What We Said Yes To
Finding innovative ways to offer Earned Wage Access to every worker, including those without existing bank accounts and debit cards.

Regulatory Landscape for EWA

As EWA has become more widespread, Payactiv and other EWA providers have worked with policymakers at the federal and state levels to influence regulations that would codify guardrails for consumers, while at the same time promoting growth in the industry. 

At the federal level, the Consumer Financial Protection Bureau (CFPB) released an Advisory Opinion in November 2020 to provide important clarification on how the agency viewed Earned Wage Access. The Advisory Opinion outlined a narrow employer-based EWA model with several criteria, and determined that model was not credit or a loan. That means that regulation under TILA would not apply to EWA models that incorporate those criteria.

Several states have considered legislation and other regulatory efforts related to EWA. For example, California has Memorandums of Understanding in place with several EWA providers to share information and help the California Department of Financial Protection and Innovation develop a better understanding of the products and services offered to California consumers.

Other states, such as New Jersey, New York, and Nevada, have introduced legislation to create registration requirements for EWA providers in these states. These regulatory efforts seek to also create protections for consumers, such as requiring verification of wages through time and attendance data, and offering multiple free options for consumers to access their wages. While no bills have passed yet, Payactiv is continuing to work with policymakers to ensure EWA is available to consumers in their states for the years to come.

“EWA is a really important tool for helping people who are suffering mismatches between the timing of the inflows and outflows in their financial lives”

Todd Baker, Senior Fellow
Richman Center at Columbia University

Dear Diary,

The craziest thing happened today. I was talking to Alejandro over drinks about how work was going, he started a new job and it’s been months since we’ve caught up. I knew he was stressed about finding a job that would help him get out of credit card debt. His little girl starts school this year and he’s worried about added expenses. I was giving him some tips earlier this year, like creating specific savings accounts and tracking his expenses. But in passing, I told him that I got lucky because my job offered Earned Wage Access, which helped me a lot.

He told me that all of the jobs he was considering didn’t have that type of benefit so we tried talking about other ways like selling some of his old appliances and canceling subscriptions he didn’t need anymore. It helped a bit.

Dear Diary,

The craziest thing happened today. I was talking to Alejandro over drinks about how work was going, he started a new job and it’s been months since we’ve caught up. I knew he was stressed about finding a job that would help him get out of credit card debt. His little girl starts school this year and he’s worried about added expenses. I was giving him some tips earlier this year, like creating specific savings accounts and tracking his expenses. But in passing, I told him that I got lucky because my job offered Earned Wage Access, which helped me a lot.

He told me that all of the jobs he was considering didn’t have that type of benefit so we tried talking about other ways like selling some of his old appliances  and canceling subscriptions he didn’t need anymore. It helped a bit.

But out of nowhere, it all worked out. He got a call from a company he had interviewed with a while back and they happen to offer Earned Wage Access. I was shocked.

My company offers it through Payactiv and I showed him my app. He told me about another company that his work uses. I don’t remember the name, but he can still access his paycheck before payday and he’s starting to build a small buffer in his checking account. I found out he’s paid over $600 this year alone in overdraft fees , I felt so bad.

$600 is literally 3 months of car payments.

I’m excited for things to get better for him. 

Hugh

But out of nowhere, it all worked out. He got a call from a company he had interviewed with a while back and they happen to offer Earned Wage Access. I was shocked.

My company offers it through Payactiv and I showed him my app. He told me about another company that his work uses. I don’t remember the name, but he can still access his paycheck before payday and he’s starting to build a small buffer in his checking account. I found out he’s paid over $600 this year alone in overdraft fees , I felt so bad.

$600 is literally 3 months of car payments.

I’m excited for things to get better for him. 

Hugh

Explore other sections

Book 4: INFLUENCE

According to KPMG EWA will become “a table stakes employee benefit in the not-too-distant future”  People are noticing as EWA gains traction as one of the most popular benefits in the market. Learn how it is influencing the industry and setting a new standard for financial wellness in Chapter 4:

Read "Influence"

Book 6: IMPACT

Did you know 80% of users who have access to EWA report they no longer use payday loans? Earned Wage Access financially supports workers by empowering them to get ahead of their finances with their earned wages. To find out more about the incredible impact EWA has had on many lives.

Read "Impact"
Back to Bookshelf

Contents

Search

Menu

Books