How Earned Wage Access Works

Earned wage access (EWA) allows employees to access a portion of their wages before payday, giving them flexibility to cover expenses without waiting. Unlike loans, there’s no borrowing involved—you’re simply getting early access to money you’ve already earned.

EWA programs are easy to use. Through an app or online portal, you request a portion of your earned wages, and the amount is then deducted from your next paycheck. Some programs may charge fees, but the service doesn’t impact your credit score or create debt. Read on to learn more.

What is earned wage access?

Earned wage access, or EWA, is a tool that allows employees to access a portion of their paychecks before the scheduled pay date. It’s a way to get paid for the work you’ve already done without waiting for your payday to arrive. 

Conversely, with a payday loan, you’re given a short-term loan that you must repay on your next payday. Importantly, you are not taking out a loan or borrowing money with EWA programs, so you don’t need to repay the funds when your payday arrives. You’re simply getting paid early. 

You’ll typically access these programs via an app or online portal. These EWA programs can be employer-sponsored or directly accessed by a consumer independent of their employer. If the program is employer-sponsored, it may be considered one of your employment benefits. 

How does earned wage access work?

You’ll typically need to enroll through the EWA provider’s app or online portal to use an earned wage access program. You’ll need to provide details about your pay, employer, and the bank account into which you want the funds deposited.

When you want early access to your pay, you’ll submit a request through the provider’s app or portal. The funds will be sent to your designated bank account. Your employer will deduct the amount you accessed early from your paycheck on your scheduled payday and pay you the remaining amount. 

Most EWA apps are employer-sponsored, but some, such as Earnin, are direct-to-consumer. A typical earned wage program’s defining characteristic is its ability to integrate with payroll systems or monitor users’ work hours to calculate their available earnings. 

This is in contrast to payday loans, which aren’t directly connected to payroll systems. Instead, eligibility is based on your bank account activity and proof of past income. 

How do you request an earned wage access advance?

You’ll follow this process if you want to request an advance on your pay via an EWA program: 

• Log into the app or online portal. You can view your available earnings once you enter the EWA app or portal. 
• Request a transfer. Decide how much of your available earnings you want to access and request a transfer to your bank account. 
• Receive the balance. On your regularly scheduled payday, the amount you accessed early will be deducted from the total pay you’re owed, and you’ll be paid the balance. 

Keep in mind that there may be fees associated with EWA programs. While some employers cover the costs as part of the employee benefits package, recent research from the CFPB found that the employers included in its sample didn’t even cover 5% of the total EWA fees. 

The fees you might be charged and how they’re structured vary by EWA provider. These potential fees include:

• Subscription fees
• Per-transaction fees
• Optional tips

If the provider you use charges a fee and you become reliant on this service, the costs can add up quickly. To put this in perspective, California’s Department of Financial Protection and Innovation found that the APR charged by EWAs equaled 331% for transaction fees and 334% for subscription fees.

The CFPB found that the fees equated to an average APR of 109.5% for employer-sponsored EWA programs. These average APRs are less than the almost 400% typical for a payday loan, but they’re still high and can significantly reduce your pay if you use EWA programs habitually. 

To this point, the average worker in a recent study conducted by the CFPB used an EWA transaction 27 times per year. That said, ensure you understand if and how much you’ll be charged in fees so you can plan accordingly. 

Benefits of earned wage access

Earned wage access programs can benefit employees and employers. They allow employees to get early access to their earned wages and allow employers to help their valued employees get paid sooner. 

These programs can offer a host of advantages to both employers and employees, making them a valuable tool for the workplace. Not only are they a tool employees can use to increase their financial flexibility, but they’re also a way for employers to help meet their employees’ needs. 

For employees

Some of the benefits of earned wage access programs for employers are: 

• Reduce reliance on high-interest loans. The EWA program may allow employees to avoid using payday loans, which often carry an APR of nearly 400%. Depending on the EWA program, there may be no cost (if it’s employer-subsidized), or the APRs could range from 109.5% to 334%. 
• Avoid late fees. If employees need early access to their wages to pay their bills on time, the EWA program may help them avoid paying late fees. Even if the EWA has a cost, it may be worth the cost if it’s less than the employee would pay in late fees.
• Enhance financial planning. If the EWA programs include embedded tools to help the users increase their financial literacy, including budgeting tools, they have the potential to improve the financial planning abilities of the employees who use these programs. 
• Increase financial well-being. These types of EWA access programs can potentially enhance consumers’ financial well-being. This is particularly true if the EWA program allows employees to avoid more expensive forms of credit, better control their spending, and save more money.

For employers

Several advantages of earned wage access programs for employers are: 

• Provide a relatively low-cost employee benefit. Even though the APRs people might have to pay if they use EWA programs on their own are high, these programs provide a benefit with value-added services employers can offer at a relatively low employer cost. 
• Reduce employee turnover. A survey found that 89% of workers said they would be willing to stay longer at an employer if an EWA was offered, and 79% said they might be willing to move to an employer who offered an EWA. 
• Attract potential employees. Similarly, adding an EWA to the employer’s benefit package can assist recruitment efforts, especially if it allows the company to offer its employees instant payment, setting itself apart from the competition. 
• Assist with cash flow needs. The EWA provider may cover the costs of the early payroll advances, settling the advances with the employer on the scheduled payday. This can be a way for the employer to get a short-term cash flow boost without taking out a commercial loan. 

Earned wage access apps

Earned wage access apps allow employees to access their wages without waiting for payday. In addition to employer-sponsored apps, there are many direct-to-consumer programs. One key differentiator with a direct-to-consumer program is that earned wages are monitored differently. 

If the direct-to-consumer app doesn’t have access to your employer’s payroll system, they may use other tools to determine your earned wages. For instance, with the direct-to-consumer EWA app offered by Earnin, you can add your earnings using one of these three approaches: 

1. Provide a copy of your timesheet in electronic or printed format.
2. Share your work email address with the EWA provider. 
3. Have your earnings added via GPS tracking if you work from a fixed physical location.

Regardless of whether the app has direct access to your employer’s payroll system or uses an alternative approach, the key is that the EWA provider monitors your work to determine how much you’ve earned in wages. You’ll only receive access to the funds you’ve already earned. 

More details about several earned wage access apps are provided in the following table:

App	Requires employer sponsorship?	Fees
EarnIn	No	$1.99 – $4.99 for instant advances
Payactiv	Yes	Up to $3.49 fee for instant transfers; up to $5 monthly program fee; $1.99 processing fee for cash pickup
DailyPay	Yes	$1.99 – $2.99 for instant advances

What are the concerns about earned wage access apps?

One significant concern with earned wage access apps is the potential fees and costs. While the costs are lower than the average APR of nearly 400% for payday loans, there’s still the potential for high APRs of more than 100% to 300% for EWAs. 

Additionally, if you habitually access your wages early, it can be challenging to stop using these apps. It’s not uncommon for EWA users to repeatedly use this tool, with a recent study by the CFPB finding the average surveyed worker accessed these transactions 27 times a year. 

One reason to stop is to avoid incurring fees, particularly if the app charges these and your employer doesn’t cover the costs. However, stopping could negatively impact your budget if you’re used to getting the money early, making it difficult to cut ties with the EWA program.

Privacy and data security is another concern. These apps often require access to sensitive information, including details about your pay, bank account, and GPS work location. Risk exists whenever you share personal information, so understanding how the provider protects your data is essential. 

I can see the benefit of using an EWA program, especially since many Americans live paycheck to paycheck. Early access to earned wages can give someone greater financial stability if bills fall on a day a few days before payday. 

Still, unless someone is very disciplined, I would probably advise against it. Not only are there costs involved, but it can also become a vicious cycle of borrowing funds if you aren’t living within your means. If the intention is to truly float things along until next payday, the better option is to use a tool like a credit card and pay it in full every month so there are no fees or interest charges incurred.

Crystal, CFP®

How does an earned wage access app differ from a cash advance app?

While EWA apps are a convenient way to access your wages early, some users may look for alternatives if their employer doesn’t offer an EWA program or if they need funds more frequently than their payroll allows. Cash advance apps are one alternative, but they work differently.

Most EWA apps allow employees to access wages they’ve already earned but haven’t been paid yet. These apps integrate with payroll systems or track work hours, like EarnIn, to calculate available earnings. Since EWA transactions aren’t loans, they don’t charge interest, and repayment happens automatically on the next payday, without adding to your debt.

Cash advance apps offer advances that are structured more like short-term loans. While they don’t charge interest, they do charge fees for faster funding or subscription fees for access. These apps determine eligibility based on banking activity rather than linking to payroll systems. 

Here’s a quick comparison:

Feature	Earned wage access apps	Cash advance apps
Borrowing against future income?	No	Yes
Debt incurred	No	Yes
Credit score impact	None	None
Tracking of earnings	Direct link to payroll or hours worked	Based on banking activity
Fees or interest	Fees may apply, no interest	Fees for faster funding or subscription, no interest on some apps
Repayment	Automatically deducted from next paycheck	Bank account deduction or scheduled payments

Though some cash advance apps may come with fees or feel like short-term loans, there are options we recommend that don’t charge interest on advances. Here are our top recommended cash advance apps:

How does earned wage access compare to other financial solutions? 

EWA offers a unique alternative to financial solutions like payday loans and credit cards because it doesn’t require you to borrow against future income. Instead, EWA provides access to wages you’ve already earned, without creating new debt or affecting your credit score. 

Additionally, EWA avoids interest-based repayment structures, which are common with other financial products.

Feature	Earned wage access	Payday loans	Credit cards
Borrowing against future income?	No	Yes	Yes
Debt incurred	No	Yes	Yes
Credit score impact	None	None	Yes
Typical APR	Can exceed 100%–300%	Up to nearly 400%	13%–23%
Repayment	Automatically deducted from next paycheck	Lump sum repayment on next payday	Minimum payments, balances carry over if unpaid

When might using a credit card be better?

Credit cards can be a better option than EWA if you’re able to pay off your balance in full each month. They often come with rewards programs and interest-free grace periods, which can be beneficial if used responsibly. However, carrying a balance can lead to high interest charges, making credit cards expensive in the long run.

Is a payday loan ever a better option?

Payday loans, by contrast, are among the most costly financial solutions available, with APRs nearing 400%. These loans often trap borrowers in a cycle of debt due to lump-sum repayments and high fees, which is why we never recommend them as a solution.

FAQ

How can earned wage access affect employee budgeting?

Earned wage access can help or hinder employee budgeting. It allows employees to cover unexpected expenses without resorting to high-interest loans or credit cards, reducing financial stress. However, frequent use can disrupt regular budgeting habits, making it harder to manage cash flow and potentially leading to over-reliance on early wage access. 

Employees may end up with smaller paychecks on their regular payday, which can cause budgeting challenges if they’re not careful about managing their available funds.

Are fees associated with earned wage access apps?

Yes, most earned wage access apps charge some form of fee, although the structure varies. Some apps operate on a voluntary tipping model, while others charge monthly subscription fees. Most apps charge additional fees for expedited transfers. 

Employer-sponsored apps might charge per-transaction fees, but some employers cover these costs on behalf of their employees. It’s important to understand the fee structure of each app to avoid unexpected charges.

Who’s in charge of earned wage access compliance?

State and federal regulatory bodies primarily oversee compliance for earned wage access services, although the exact requirements vary. Employers and EWA providers must comply with labor laws, including wage and hour regulations, consumer protection laws, and any state-specific EWA guidelines. 

Providers must also protect user data under privacy laws. As these services evolve, regulatory oversight is increasing to ensure transparency, fair fee structures, and protection of consumer rights.

What should employers know about choosing an earned wage access provider?

Employers should consider fee structures, ease of integration with payroll systems, data security, and employee experience when choosing an EWA provider. Selecting a provider that offers transparent fees, protects employee data, and provides reliable customer support is important. 

Employers should also evaluate whether the EWA service offers educational resources to help employees use it responsibly. Understanding how the provider complies with relevant regulations and manages fees is essential to making an informed choice.