What is Earned Wage Access?

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There is something very interesting about earned wage access that everyone needs to know about. It can be quite a while waiting for payday, especially when you have an unexpected expense. This is where earned-wage access comes in.

What is Earned Wage Access?

Earned wage access, also known as early wage access allows employees to access and take from their paycheck before payday. It makes getting money before your payday easy.

Well, while the ability to access money as it is earned is helpful to the company’s benefits, it can make budgeting difficult in the long term. However, as you read through, you will find out what earned wage access is.

What is Earned Wage Access?

Earned wage access, abbreviated as EWA, is a company benefit that gives employees a chance to get part of their salary or wages before their payday. Companies such as Amazon, Walmart, and McDonald’s offer earned wage access as part of their benefits.

You do not need to pay much or do too much to be a part of EWA. All you need to do is pay a few fees, and your money will be sent within a day or two, sometimes instantly. However, the money you will be getting early will be removed from your next paycheck.

How Does Earned Wage Access Work?

Earned wage access works in a very amazing and easy way. It is very easy to understand and participate in. Just by getting access to it, you can access your paycheck earlier before the due date. Below are the steps on how earned wage access works.

  • Download the Earned Wage Access app and link your bank account to it: Through the Google Play Store or the Apple App Store, download the EWA app that is partnering with your employer. When you do that, you will be required to enter a link to a debit card or bank account where your money can be deposited.
  • Request for part of your paycheck: On the app, you will find the limit to how much you can request each day. You will also find out that half of your earned wages is the common limit to how much you can remove. Also, your employer may set its own limits for its employees.
  • Agree to the terms of the app as well as your potential fees: Each time you request payments in advance, the app will inform you how much you can deduct and when you can. Then it shows you any transfer fees you need to make. By agreeing to it, your money will be deposited into your account within one or two working days.
  • Receive the rest of your paycheck on payday: After you have deducted the amount from your paycheck, on payday, the amount you have left will be given to you.

This is simply how earned wage access works. It is just a simple step to follow, and you can withdraw from your paycheck whenever you want.

How to Qualify for Earned Wage Access Services

It is quite easy to qualify for early wage access. EWA does not require so much to be qualified for, and it doesn’t require you to provide any information. Instead, it uses information on your payroll as well as limits set by your employer to decide if you are qualified or not. Below are the steps to qualify for EWA.

  • Get a job with a company or an employer that offers earned wage access as a benefit.
  • Download the mobile app for any of the EWA programs your employer works with.
  • Link a debit card or bank account you would like your money sent to.
  • Create a direct deposit.

When you do these, you become qualified for EWA, which you can use anytime you wish.

What to Look Out For in an Earned Wage Access Provider

There are different earned wage providers you can select from and partner with as an employer. These providers partner with different employers and help employees access their paycheck even before their payday. However, there are five different early wage access providers you can select from, and below they are listed.

1. Employer-Based Solution

This provider contacts every employer and offers them solutions. They work directly with the employers to give employees early wage access.

As an employer, you do not need to change your payroll process because this provider integrates directly with employers, and they take their time to collect information about their employees, how well they have worked, and how much they have earned.

2. Encourages Responsible Use

One thing you need to look for in an EWA program is if they encourage responsible use. Earned wage access is not a loan; instead, it only gives you access to money you have already earned.

However, the appropriate EWA loan will include financial wellness tools and steps that help employees grow financially.

3. Free

Reading the terms and agreements of some earned wage access providers will open your eyes to the fact that there are hidden fees, and both the employer and the employees need to make use of them. So many EWA providers try to hide their feeds under membership models, while others hide them under the fine print.

4. Only Deducts the Earned Wage Access Amount

Some EWA providers do not work in deductions; instead, they do wage assignment, which requires employees to deposit their full paycheck into a different bank account that is controlled by the EWA provider.

5. Doesn’t Involve Pre-funding

When you are choosing an EWA provider, you won’t want to be bothered about fronting the capital that wants to give your employees their earned wages. It is wise to avoid the risk of getting a third-party account for your employees’ paychecks.

Popular Earned Wage Access Companies

There are three popular earned-wage access companies. These companies are the most popular, and they are popular for how effectively they work. These EWA companies are Payactiv, DailyPay, and Even. Below, they are explained to give you insights on how they work.

  • Payactiv: This company allows employees to get up to 50% of their daily pay on every workday. Transferring money from this earned wage access to your account takes about 1 to 3 working days, and some employees get their money instantly for either no bill at all or a bill of $1.99 to $2.99. This depends on how the money is received and if you have set up a direct deposit.
  • DailyPay: This makes decisions on how much of your paycheck you have deposited each time you make a request. Its transfer option, which requires you to pay no fees, takes one to three working days to transfer your money, while the paid version is instant.
  • Even: It allows employees to get up to 50% of their paycheck and allows them to get their money instantly for a fee. But if their user wants to use the no fee feature, it will take one working day for their money to be transferred.

Depending on which benefits your employer offers, you can use them to access your paycheck before payday.

Benefits of Earned Wage Access

There are different benefits to earning earned wage access as an employer and an employee. Both the employer and the employee benefit from using EWA. Below are some of the benefits of EWA.

For Employees

  • It increases financial stability.
  • Job satisfaction is increases.
  • Improvement of financial wellness.

For Employers

  • It improves employee retention.
  • Improvement of employee morale.
  • Productivity is increased.
  • Ability to save money.
  • Way better financial wellness.

These benefits make the workplace better, encourage employees to work better, save them from financial stress, and help employers save better.

Is Earned Wage Access a Loan?

Earned-wage access is not a loan. Instead, it is a payroll scheme that allows employees to access their paycheck before their payday. It allows them to withdraw in case of any financial issue before the payday. However, you do not need to pay back any amount of money you remove from your paycheck.

Do Employees Need Employer Approval to Withdraw?

There is no need for approval to withdraw from your paycheck as an employer. You can easily request a withdrawal from your paycheck whenever you want without permission or approval from your employer.

When Can an Employee Request to Withdraw?

Just as soon as HR gives employees access, they can request a withdrawal from their paycheck. All employees can access their salary anytime they want in the month until the payroll date is due. This means there is no specific date or time you can withdraw from your paycheck.

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