Everything HR and Payroll Executives Need to Know About the CFPB’s Proposed Rule on Earned Wage Access

On July 18, 2024, the Consumer Finance Protection Bureau (CFPB) proposed a landmark interpretive rule that will likely change the landscape of employer-integrated EWA and on-demand pay. This interpretive rule demonstrates that the CFPB favors fee-free models for employer-integrated EWA products — and new regulations could come faster than anyone expects because the industry has matured rapidly in the last few years.

Over the past decade, hundreds of employers began to offer the service to their employees, making earned wage access a mainstream HR benefit for hourly workers.

Since then, the market has continued to accelerate. Growth in the number of transactions that EWA providers processed grew by over 90% from 2021 to 2022, with more than 7 million workers accessing about $22 billion in on-demand payments in 2022. That’s phenomenal growth, and the number of workers using earned wage products continues to increase each month.

A landscape that began with a handful of forward-thinking employers working with fintech startups quickly grew to dozens of providers in the U.S. alone, as payroll providers, card providers, neobanks, and new startups all entered the market, each with their own flavor of how to make the magic happen.

The CFPB’s proposal could signify a significant shift in the employer EWA benefits space due to its concern that employees pay a fee for early access to their earned pay. Whether or not it actually becomes law, it’s clear that zero fees for EWA are in our not-too-distant future.