What Is Earned Wage Access and How It Works

With the rising prices of housing and utility bills, food necessities, etc., many employees are living paycheck to paycheck. And most of the time, the financial stress weighing on their shoulders affects how they perform at work, which can be detrimental to the company. But as an employer, there is a way to lessen your employees’ financial burden: earned wage access. 

If you’re curious about what this means, read on, and we’ll discuss what you need to know about earned wage access—how it works and how it can benefit you and your employees. 

Understanding Earned Wage Access

Earned wage access, or EWA, is a payroll scheme that allows employees to access their earned money before their employer-designated payday. That means employees can get their net pay earnings early and use them whenever they need them most. 

Also known as on-demand or instant pay, EWA can be a saving grace for all employees since it gives them peace of mind about their pending bills while waiting for their salaries to arrive. It protects employees from resorting in over drafting on their bank accounts and payday loans. 

Simply put, EWA is an excellent option for business owners to help their employees be free from debts and allow them to be financially stable. 

How Does Earned Wage Access Works?

Earned wage access works by pairing API integration with HR management technology. That means leveraging these specific applications will make employee wages readily available, and they can access them whenever they wish to. 

Additionally, integrating with payroll software allows employers to make all necessary deductions before sending the wages to employees. This process is reassuring to employers since they wouldn’t worry about the funds they need to remit to tax authorities. 

However, there is only specific HR management software you can integrate for EWA to work in your payroll system. Suppose you are considering using on-demand pay for your employees. In that case, it’s better to consult with providers first to determine if your payroll process is suitable for earned wage access. 

It’s also worth noting that when employees access their net pay before the regular pay date, the money they acquired is automatically deducted from the total earnings they will receive on the next payday. For instance, the two-week salary of an employee is $1,000. If they opt to get $300 before the pay date, they will receive a total of $700 on their regular pay date. 

Benefits of EWA for Employees

Provides Financial Stability 

Earned Wage Access paves the way to creating financial stability and security for employees. It could be a means for them to grow their savings and build their emergency fund. 

Since EWA allows employees to have early access to their money, they wouldn’t be stuck up waiting on the next payday, only for their earnings to be consumed by rent, mortgage, and other bills. Thus, they can create a habit of saving up and build a financial safety net for themselves. 

Prevents Credit Card Debts and Payday Loans

With the bills stacking up, it’s no surprise that most employees ran out of money before payday. Cases like this make employees more susceptible to debt traps as they could resort to payday loans and other credit card solutions. 

Earned wage access prevents employees from falling into these debt traps as it doesn’t involve any credit checks or interests, and they could easily access their earnings if needed. 

Benefits of EWA for Businesses

Increased Productivity and Efficiency 

Providing employees an avenue to access their wages early can help boost their productivity and work efficiency. They will see your genuine concern for their financial well-being, motivating them to exert more effort in their day-to-day tasks. 

Higher Retention Levels

Finding and retaining high-caliber workers is getting more challenging as the employment market becomes more saturated. Offering a program for employee financial well-being is an excellent method to address this. It is something that many employees seek in their potential employers in the post-pandemic era.

Drawbacks of Earned Wage Access

True enough, EWA offers significant benefits to both employees and employers alike. However, since this is still a new concept and not many incorporate this, there will inevitably be drawbacks. It includes:

  • Limited technologies that tailor earned wage access
  • Restrictions in how employees can receive their pay due to laws and regulations
  • Cybersecurity threats
  • High employer fees and access funds charges

While it’s evident that the benefits outweigh the disadvantages, it is still crucial to understand both sides before making EWA available to employees. Business owners must also look for the right provider that won’t charge their employees extra cash and secures their personal information


Earned wage access provides employees the freedom to manage their finances without falling into debt traps. It could also pave the way for businesses to create a positive workplace while increasing productivity and efficiency. If you’re considering EWA in your payroll system, now’s the time to do so. 

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