In recent years, earned wage access (EWA) has emerged as a game-changing financial service for employees looking for financial flexibility. It has revolutionized how employees interact with their earnings and made it easier for workers to pay for expenses as they arise. As a leader in the earned wage access industry, Tapcheck has helped deliver financial flexibility to hundreds of thousands of employees.
Jump to:
Adoption of earned wage access
Who qualifies for earned wage access?
Are there costs or fees associated with wage access?
Benefits of earned wage access for employees
Advantages of earned wage access for employers
What are the potential drawbacks of earned wage
The future of earned wage access
What is Earned Wage Access?
Earned wage access allows employees to access their wages before the traditional payday, helping pay for surprise expenses or make ends meet when cash is short. This innovative approach to payroll is rapidly becoming the new norm in certain industries like fast food, retail, and healthcare, as it addresses the crucial need for financial flexibility for working Americans.
Adoption of Earned Wage Access
The impact of earned wage access services has been shown through user surveys across industries. 76% of employees across all age groups and industries said it was important that their employer offered earned wage access programs. And yet, only half of those workers had access to these programs. While this is a sharp increase from just a few years ago, it’s clear there is still unmet needs in the workforce. Employers that are on the frontlines of hiring and turnover battles (like QSR, retail, and healthcare) are scrambling to add this benefit their workforce is asking for.
How Earned Wage Access Works
Earned wage access typically operates under two models:
- Employer-sponsored: This model, which Tapcheck specializes in, integrates earned wage access into existing payroll and timeclock systems. It's particularly popular in countries with robust regulatory frameworks and financial infrastructure, ensuring compliance with guidelines and consumer protection laws.
- Direct-to-employee: This model allows individuals to access their earned wages through third-party apps, often with higher fees and lower withdrawal limits compared to employer-sponsored solutions. These apps have come under scrutiny for their practice of asking for gratuity from the employee after a withdrawal.
Who qualifies for earned wage access?
Eligibility for earned wage access depends on your business's policies and the EWA provider you choose. Here’s a look at who typically qualifies:
- Active employees: Employers generally make EWA available to employees who are actively employed and have earned wages, whether they are full-time, part-time, or hourly.
- Tenure: Some employers require a minimum length of employment, such as a few weeks or months, before allowing employees to access paychecks early.
- Work hours: EWA can be tied to the number of hours an employee has worked. A new employee, for example, may be asked to work a minimum number of hours before becoming eligible.
Basically, EWA policies can be tailored to your business needs. You can choose to offer EWA to specific departments and roles—hourly workers, for example—or extend it to your entire workforce as part of your benefits package. The beauty of EWA is its customizability, based on what works best for your company.
Are there costs or fees associated with wage access?
Employer-sponsored earned wage access programs are often low cost for employees, often charging a small ATM-like fee for transactions. Employees should be more cautious, however, when considering direct-to-consumer EWA services, which often charge higher transaction or subscription fees.
For employers, EWA programs are often free or low-cost. Some providers do charge for setup or integration, but many reputable solutions come at no cost to the employer and are designed to integrate seamlessly with payroll and timekeeping systems. By choosing the right provider, you can offer your employees a valuable benefit without adding significant expenses to your business.
Benefits of Earned Wage Access for Employees
Earned wage access offers numerous advantages to employees:
- Financial flexibility to manage unexpected expenses
- Promotion of financial well-being and literacy
- Enhanced job satisfaction and loyalty
Advantages of Earned Wage Access for Employers
By implementing earned wage access solutions like Tapcheck, employers can:
- Attract top talent and enhance employer branding
- Increase employee retention and loyalty
- Boost productivity by reducing financial stress
- Support overall financial wellness among staff
What are the potential drawbacks of earned wage
With a wide variety of solutions on the market, earned wage access programs can vary widely—and some programs come with potential drawbacks depending on who the provider is, how the EWA is structured, and how it's used. Here's what to keep in mind:
- Fees and costs: EWA solutions should be transparent and affordable for employees, but not all providers are so straightforward. Direct-to-consumer options, for example, often come with hefty transaction or subscription fees that can add up quickly, especially for frequent users. To keep costs manageable, employers can opt for employer-sponsored solutions and choose providers with clear, low-cost structures that prioritize fairness for employees.
- Integration and administration: Depending on the payroll and timekeeping systems your company uses, some EWA programs can be tricky and time-consuming to integrate. To avoid hassles, choose a provider that offers seamless integration with your current payroll system, making the process stress-free. Plus, make sure they provide solid support to help you every step of the way.
- Unnecessary overuse: While EWA offers valuable financial flexibility, it’s not a fix for poor money habits related to non-essential purchases. The good news is that the best EWA programs pair early wage access with built-in financial wellness education, helping employees make smarter money decisions. To truly empower your team, ensure your EWA solution includes this benefit.
The Future of Earned Wage Access
As earned wage access continues to evolve, its integration into payroll practices promises to redefine the traditional pay cycle. Tapcheck is leading this charge, making financial wellness an achievable goal for workers nationwide.
The adoption of earned wage access across different industries reflects a growing recognition of the need for financial services that align with the modern workforce's expectations. While the implementation and impacts of earned wage access may vary from shop to shop, its core proposition remains consistent: providing employees with control over their finances, thereby fostering a more engaged, productive, and financially secure workforce.
As a leader in the earned wage access industry, Tapcheck has helped deliver financial flexibility to hundreds of thousands of employees. By choosing Tapcheck for your earned wage access needs, you're not just offering a financial benefit — you're investing in your employees' financial health and your company's future success. Request a demo to see what Tapcheck can do for your workforce.
Frequently asked questions
What is the difference between earned wage access vs. traditional payroll systems?
Earned wage access (EWA) solutions generally integrate with traditional payroll systems to give them added flexibility. With traditional payroll, employees typically have to wait for a set payday—whether that’s weekly, biweekly, or monthly. In contrast, when payroll is integrated with EWA, employees can access the wages they've already earned at any time before payday, usually through an earned wage access app or platform.
This immediate access can reduce financial stress and help employees manage unexpected expenses. For employers, EWA integrates seamlessly with existing payroll systems, offering more control and convenience without the need to process payments early.
Is earned wage access a loan?
EWA is not technically a loan. Unlike loans, where you borrow money you don’t have yet, EWA simply lets employees tap into their own earnings before payday, without taking on any debt or paying interest.
While EWA may include a small transaction fee for each use, it’s not like a traditional loan that requires repayment. The amount of earnings accessed is simply deducted from the employee’s next paycheck, so no borrowing or credit is involved in the process.
How does EWA affect employee retention?
EWA is a powerful tool for boosting employee retention because it improves employer brand and builds loyalty. According to Tapcheck’s Spring 2024 user survey, 50% of employees said their opinion of their employer improved thanks to EWA. EWA can also boost team performance: 43% of employees reported working harder when they had access to EWA.
Why does EWA make such a big difference for many employees? Today’s employees strongly value financial flexibility. At a time when many Americans are living paycheck to paycheck, EWA is a benefit that helps employees avoid financial hardships like overdraft fees or payday loans, which are often sources of stress and dissatisfaction. Employees given access to EWA see that their employer understands and cares about their well-being, leading to stronger job satisfaction and loyalty.
Employees who seek the flexibility and convenience of early wage access are more likely to choose and stay with companies that offer it. In today’s competitive job market, offering this benefit not only helps retain top talent but also attracts it.
