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Earned wage access (EWA) apps are financial tools that allow employees to access a portion of their earned wages before the traditional payday. These apps are designed to address cash flow challenges and provide financial flexibility to workers needing funds between paydays. Users can withdraw a portion of their earned wages immediately instead of waiting for the standard weekly, bi-weekly or monthly payday.
Typically, EWA apps partner with employers to integrate with payroll systems, allowing employees to track their hours worked and access a portion of their earned but unpaid wages. The amount available for withdrawal is based on the hours already worked, and users may be charged a small fee for the service.
The primary goal of EWA apps is to help individuals cover unexpected expenses, avoid late fees and better manage their finances in real time. However, it’s essential for users to be mindful of any associated fees and to use these apps responsibly, as frequent withdrawals will reduce the amount received on the regular payday.
Access to earned wages is not necessarily tied to the use of apps; it depends on the specific policies and systems employers implement. While many EWA providers offer apps as a convenient way for employees to access their earned wages, some services may also offer alternative methods like web platforms, text messages or USSD Codes, or direct integration with payroll systems.
Earned Wage Access (EWA) platforms and apps serve the same primary function: enabling employees to access their earned wages before their regular payday. The distinction lies in their target users and implementation. EWA platforms are designed for employer use, integrating with the company’s payroll systems and often including additional features like financial wellness tools and employer analytics. This allows employers to manage and offer EWA as an employee benefit. On the other hand, EWA apps are tailored for employees, focusing on providing a straightforward and easy-to-use interface for accessing their wages. Both the platform and the app can be linked to ensure a seamless experience from backend management to frontend user access.
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DailyPay EWA Platform Employees can access their earnings on their schedule. There are no interest or charges based on the time value of money |
Two-Day Early Pay Early pay allows employees to access their pay up to two days before payday |
Predatory Payday Loan Predatory payday loans may seem like a quick fix but they come with high rates, late fees, and risk of overdraft charges |
Credit Card Advance Cash advances carry high interest rates and transaction fees |
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Amount available
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Access to net earnings tailored to all pay profiles
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Early pay allows employees to access their pay up to two days before payday
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These short-term, high-cost loans are typically $500 or less
The higher the amount the greater the transaction fee and interest rate will be. |
It depends on their credit card company, but 20% is common
Beware that the fee and interest rate will hinge upon the amount and could compound1 |
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Interest rate
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No interest or charges based on the time value of money
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0% (Not applicable)
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Capped in some states 2 but can equate to up to 400% 3
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Average credit card cash advance APR is around 30% 4
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Impact on credit score?
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No impact (and our Credit Health can help users monitor their score!)
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No impact
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No credit check is required, but it could damage their report if they don’t repay on time
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Requires a credit check and could damage their score if they don’t repay on time
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Late fees
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None
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None
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Varies by company 5
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Varies by company
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Time to access
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Instant for a fee or next business day 6
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Two days before payday
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One business day 7
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Varies by company but typically a few days
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Additional platform features
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Varies by company but can include:
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None
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None
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Employer-sponsored
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Yes
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No
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No
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No
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Earned Wage Access Apps vs. Instant Pay Apps vs. Cash Advance Apps
It is essential to understand the difference between EWA apps vs. instant pay apps vs. cash advance apps, as the description may sometimes be unclear.
Earned wage access apps like DailyPay stand apart from traditional cash advance or paycheck advance apps.
Instant pay apps provide more convenience and security than writing a personal check. (Some popular instant pay apps that you are likely familiar with include Zelle and Venmo.)
Although both earned wage access apps and instant pay apps offer convenience when it comes to personal finance, the similarities end there.
EWA apps give users access to the wages they earned from their jobs, whereas instant pay apps focus on transferring funds already in your bank account.
Cash advance apps often offer quick access to borrowed funds, but they may come with high fees and interest rates, potentially trapping users in cycles of debt.
EWA apps, on the other hand, provide a responsible solution by allowing employees to access a portion of their earned wages without borrowing. This distinction is crucial, as it promotes financial health, prevents reliance on high-cost borrowing and encourages responsible cash flow management, ensuring users can meet immediate needs without falling into the pitfalls of debt.
Earned Wage Access for Small Businesses
Empower small business employees with DailyPay’s earned wage access app, designed to bring small businesses the same EWA financial advantages as enterprise companies.
DailyPay for Small Business allows your team to track, spend, and save their earned wages on their schedule, eliminating the need to wait for traditional paydays.
How Earned Wage Access Apps Improve Financial Wellness
Earned wage access apps give employees greater access to earned pay. This greater access leads to improved financial wellness.
Employees who feel more financially confident can spend more time focusing on their jobs and less time worrying about finances. An EWA app through DailyPay helps employers deliver financial wellness benefits that give employees the control and peace of mind needed to be more engaged, motivated and happier at work.
What to Look for in an EWA App
When choosing an EWA app it’s important to understand the benefits and features fully.
For employers, you may want to consider a few factors:
- Does the EWA app (and vendor) offer a simple integration? It’s important to ensure you don’t create unnecessary work for your payroll team and instead choose an EWA app and vendor that integrates perfectly with your existing payroll system.
- Go with an EWA app that has a proven track record for success. Consider how they have helped other companies improve retention, hiring and employee engagement.
For employees, you may want to consider a few factors:
- Does EWA allow up to 100% of your earned pay or do they cap your earnings at 50%? It’s important to understand exactly how much of your earned pay will be available to you.
- Does the EWA app provide other financial wellness tools in addition to the core EWA function? Consider an app that provides other features including savings tools and tips access.
So how does DailyPay’s EWA app stack up against a few other major EWA apps in the market?
The following table provides a fact-based evaluation of EWA apps for your consideration.
So how does DailyPay’s EWA app stack up against a few other major EWA apps in the market? View our competitor pages for a more detailed breakdown: Payactiv, Instant Financial, Rain, Branch and Tapcheck.
Sources: DailyPay;
Payactiv; Branch;
Ceridian
https://www.dayforcewallet.com/organization
https://www.ceridian.com/uk/products/dayforce/payroll/wallet-on-demand-pay
https://www.zdnet.com/finance/banking/ceridian-redefines-how-employees-get-paid-with-its-dayforce-wallet/
Learn more about the benefits of an earned wage access app and discover how it can make a difference for employers and employees alike.
