In 2020, the ability to access your income as you earn it has shifted from a nice benefit to have to an essential one. Amid the global health crisis, the antiquated way employees have been paid for decades is changing thanks to advancements in technology. With a surge in on-demand pay providers, government agencies are weighing in on which models are optimal for consumers.
On November 30, the Consumer Financial Protection Bureau (CFPB) finalised its advisory opinion process and simultaneously issued its first advisory opinions, including one which concerned Earned Wage Access (EWA). The advisory opinion process, similar to a private letter ruling from the IRS or a no-action letter from the SEC, is specific to a certain set of facts and circumstances, and each opinion has narrow applicability.
In the EWA opinion, the CFPB explains how a new technology called Earned Wage Access, by enabling workers to get paid as they earn money, rather than wait weeks at a time for their employer-scheduled payday, has provided a critical and more consumer-friendly alternative to payday loans and other predatory alternatives.