Image
asterisk-icon

Global Work Glossary

  • Results for "undefined"
Table of Contents

How EWA Works

Pros of earned wage access

Cons of earned wage access

Earned wage access vs. cash advance

What is earned wage access

Earned wage access (EWA) is a financial service that allows employees to access a portion of their earned wages before their scheduled payday. This service is designed to help employees manage unexpected expenses and reduce financial stress by providing timely access to their earned income.

How EWA Works

  • Set up your app or platform and link your bank account. Your employer will determine the platform, which will probably be linked to their payroll system. It will display how much of your paycheck you earned.
  • Request a part of your paycheck. Depending on the app, or your employer, you will see a limit of how much of your paycheck you can request.
  • Review terms and potential fees. Depending on the app or employer, you may be charged a fee when making your request.
  • The advanced amount is deducted from the next paycheck, ensuring a seamless repayment process.

Pros of earned wage access

The primary benefit of EWA is the immediate access to earned wages, which can be crucial during financial emergencies. This access helps employees avoid late fees, overdraft charges, or the need for high-interest payday loans. Additionally, EWA services do not require credit checks, making them accessible to a wider range of employees, including those who might not qualify for traditional financial products.

Cons of earned wage access

While EWA offers significant advantages, there are potential drawbacks to consider. The most obvious is that you might get a smaller paycheck on the actual payday because of past advances. This situation requires careful financial planning and budgeting to avoid shortfalls. Additionally, if not managed carefully, using EWA could lead to overdraft fees, adding to financial strain.

Earned wage access vs. cash advance

Similarities:

  • No credit checks: Both EWA and cash advance apps bypass traditional credit checks, avoiding both soft and hard inquiries.
  • Limited loan amounts: EWA services allow employees to access a portion of their earned wages before payday. Limits may vary depending on the employer and may be subject to daily maximums. Cash advance apps typically limit advances to about $200, although some may offer up to $500 or more.
  • Quick access to funds: Users of both EWA and cash advance apps can expect to receive funds swiftly, generally within a few days. There is often an option to expedite this process for an extra charge.

Differences:

  • Involvement of employer: EWA services require a partnership between the service provider and the employer to be available to employees. Cash advance apps can be downloaded and used by people from an app store without any employer's help.
  • Criteria for cash advances: The amount available through an EWA service is directly linked to the user’s paycheck, with possible restrictions set by the employer. For cash advance apps, the available amount is influenced by the cash flow in the user’s bank account.
  • Fee structure: Generally, EWA apps tend to have fewer fees compared to cash advance apps. While EWA apps might charge for fast transfers, cash advance apps often include fast-funding fees, optional tipping, and sometimes a monthly subscription fee.

Guide

Guide to Employee Compensation Strategies
Hiring globally for the first time? Learn how global companies benchmark and set compensation in a fair and consistent way. Click to get this free investigative guide.

About Us

Customer Reviews

Help Center

API Documentation

Integrations

Deel Blog

Templates & guides

Careers

Get started with Deel

Pricing

US payroll

PEO

Deel Contractor of Record

Manage global workforces

Hire employees

Hire contractors

Relocate workers

Open API

Service status

Press

The Deel Advantage
Get the latest insights on today's world of work delivered straight to your inbox.

© Copyright 2024. All Rights Reserved.

Disclaimer

Privacy Policy

Legal Hub

Whistleblower Policy