Published 14 MAY 2022
What exactly is an Earned Wage Access?
An EWA (Earned Wage Access) is a payroll program
allowing the employees to gain access to a part of
their wages as soon as they earn them. These plans
help the employees to pay their bills from time to
time, thus reducing their financial stress. Because
these schemes provide early access to your earned
money, there is no interest charged.
Types of Earned Wage Access Schemes:
This program has different forms and can be
delivered to consumers in different ways. Many
authorized EWA schemes are offered by the employers
themselves directly to the employees. There are
different types of early wage access models:
• Direct-to-consumer: This scheme works more like a
loan. The app sends money to the employee as an
advance, and the employee has to pay it back out of
their bank account on the day of payment.
• Self-hosted advances: It fulfils the wage
advancement requests of an employee. Whenever the
employees need some kind of financial support, the
company comes forward. This may prove a bit risky
for the administration.
• Self-hosted daily pay: Wages are paid daily. This
scheme proves to be very hectic for the employers
and may confuse tax payments and other factors.
• Employer Benefit: This model connects to the
employer's pay sheet system and enables the
employees to receive advance payments. The employer
does not have to worry about anything as it does not
have to provide extra money to the employees. The
Earned wage access model has much less of a lift for
both the employee and the employer.
How does the Early Wage Access model benefit the
Even before the pandemic, workers lived on a pay
check-to-pay check basis. They experienced serious
cash flow pressure, which was mostly driven by a
disconnect between traditional pay cycles and daily
Payroll. By offering employees immediate access to
their payments, companies secure an easy method to
attract workers towards themselves. Businesses find
that EWA is very attractive to workers as it
benefits financial wellness and makes a meaningful
difference in one's life.
The benefits for the employees cover quicker
payments, avoidance of credit card debts, default
fines, and control over their own money. It also
reduces financial stress. It gives the employees the
liberty to use their salary as per their
requirements. It provides flexibility and benefits
mostly the lower-income employees by catering quick
access to early payments during their financial
EWA is also a response to the huge need for
One of the most important reasons for the growth of
EWA is the high volume of payday loans. People take
loans to pay their bills on time; this increases the
burden on them as banks charge interest. According
to a survey, around 12 million Americans use payment
loans each year. $9 billion on average is paid
annually in payday loan fees. The market size of
global payday loans was valued at $32.48 billion in
2020 and is estimated to reach $48.68 billion by
2030. So, EWA is a saver in this case. It prevents
people from stopping borrowing from the banks and
paying heavy interest without any reason.
How does the Early Wage Access model benefit
When employees don't get the support they need from
their workplace and are finally stressed, the
business suffers. 3 in 5 Indian workers (November
2019) are stressed about money and are in
financially unstable positions due to emergency
Payroll. These Payroll affect the employee's
productivity costing the company a lot more money.
To reduce this tension, the employees need to trust
their firm to drive them to keep going. To get their
payment almost immediately when you need it makes a
huge difference. Someone going through a financial
problem will understand the need.
Also, it attracts a lot of new employees as people
will want to pick the advance salary scheme rather
than the traditional payment methods. Another
benefit is that employees can check how much money
they have withdrawn. This helps them keep track of
their Payroll too. The EWA system helps in
increasing the employee trust in a company,
resulting in reduced employee turnover. As soon as
employee satisfaction increases, your company's
value starts rushing to the top. From an employer's
point of view, EWA is the perfect payroll model for
the post-pandemic world.
Business Factors on which EWA depends
Although there are many reasons why EWA is one of
the best schemes for your suitable business, it does
depend on some factors. You must go through these
before implementing the EWA system in your
Factors such as:
• Size of your workplace
• The firm in which you operate
• Contract types and salaries of your company
• Countries you operate in
• The difference in Requirements and payroll
legislation of different countries.
Clearing Out Some Misconceptions about EWA:
• Workers will leave the company – Businesses think
that workers will leave the company taking the
money. But EWA increases the retention of employees.
Rather than clearing out the workforce, it expands
• Advance payments are bad practices – Businesses
always try to avoid financing in advance. But they
fail to understand that this traditional pay system
hampers employee productivity. EWA scheme simply
allows employees to recover their payments in
advance and allows both groups to succeed without
gaining an unfair advantage.
• Access to money leads to unusual spending – Some
businesses fear that employees will never save and
spend frivolously. But, it's not the case. EWA gives
them financial flexibility and saves them from
debts, unpaid rents, and bills that may carry fines
on late payments. Managing finance is easier when
you have control over it.
• This system will scare new candidates – Companies
think EWA will confuse new workers. But, today's
young professionals prefer digital methods of
payment more. They are interested in systems that
are flexible and fast. So, they will prefer EWA more
than any other payroll system.
Why does EWA serve as a company benefit?
EWA helps with retention and recruitment efforts.
Employees seeing the advantages of this scheme
quickly sign up for this, and by word of mouth, the
positive reviews are spread. It helps differentiate
businesses from competitors and serves as an angel
program for those looking to hire tight labour
pools. Once the workers start using it, it becomes
very difficult to go back to the traditional payment
method. It benefits both the employer and the
employee, making it one of the best company
So, now you know why EWA is an attractive scheme for
businesses and how it will help boost your business
and give it new heights.
Conclusion: Companies, where work is more
flexible are more suitable for EWA schemes. The
EWA system helps free your employees from the
burden of debts by giving them access to their
earned money. It shows that your company values
the employee's needs and is ready to contribute
to your problems. So, by using the EWA scheme,
your company will soon be powering ahead like
never before. It makes sure that the employees
are eager to work with you and your firm to
ensure a better financial future.