Flexible Earned Wage Access

Wages are paid in arrears*. Weekly, biweekly or monthly.

The fixed payroll schedule that you see at any business is enforced by employers and enabled in-house, or by payroll providers.

Earned Wage Access is a term used to describe a new type of employee benefit designed to help employees better manage their finances.

The underlying concept is simple: As long as you have earned your wages, you can access them on-demand. The accessed amount is adjusted in the next paycheck. It is a simple process change that has enormous positive ramifications for the employee and employer.

For the employer, there is no change in the payroll schedule and funding process because the Earned Wage Access provider manages the funding process and synchronizes with the payroll system.

So, why do employers offer Earned Wage Access?

Forward-looking employers know the high cost of financial stress for their employees. To help them get ahead of these issues they offer access to earned wages.

Over 90M people in the US live paycheck to paycheck. A small timing discrepancy between expenses and earnings can push them into a debt spiral. The cost of waiting to get paid when you don’t have access to credit or savings is punitive. An overdraft fee can be $35 and a late fee can be even higher if it is a delayed rent payment.

Isn’t this EARLY wage access?

It isn’t as much “early” as it is “timely”. The reasons why are:

1. The accessed funds were already earned.
2. Payroll date is a function of IT systems and business process.

The word ‘early’ is only applicable if the date of payroll was based on a fundamental standard. The reality is that it isn’t. For example, with 24-hour news channels and the Internet, do we use early for the news we access? Reporting faster or accessing news on-demand is a necessity and a mark of societal progress. So is Earned Wage Access.

Finally, when employees are asked about their views, the common answer is that accessing already-earned wages is the best way for them to avoid punitive fees of borrowing from lenders when they have earned funds owed to them by the employer.

Why Access? Isn’t this an Advance?

A payroll advance is when a company, either directly or through a third party, allows you to obtain your upcoming paycheck(s) ahead of time.

A payroll advance is of many types of credit, and there are rules regarding amount, who qualifies for it, the repayment schedule, etc. An “advance” can be for wages that have not yet been earned, and this might even be credit that just has a low interest rate.

Access to already-earned wages is not a loan.  The word “access” has a very specific meaning.

Access, by definition is to your already earned wages, akin to withdrawing money from a bank account.  Access is exactly what it says it is – you can only Access what you have already earned.

Access is not a loan and here is why:

1. There is no underwriting or application process.
2. No credit is extended or debt created.
3. There is no interest charged

Why not Earned Income Access?

Wage is the payment that one gets for her work. Income is the totality of money that one gets.

Income can be from many sources like rentals, dividends, etc.

Wages are a contribution for direct work and are calculated for hours completed, tips earned, miles driven, boxes moved, etc.

A wage is payment for labor that has been rendered according to both a legal and social contract. It is a right, a contribution of work completed. An earned wage is not something that can be taken away, and for this reason, when earned it should be made accessible in a timely manner.

Why is understanding Earned Wage Access important?

Earned Wage Access is merely the spark that begins a chain reaction, one that leads to enhanced well-being of both individuals and society.

Like any new concept, it is slowly becoming understood. Marketers and businesses have tried to coin derivative terms for their specific purposes and needs. You can find dozens of names like FlexPay, InstantPay, Daily Pay, Flexible Wages, HastyPay, StreamPay, PayOnDemand, Instant Wages, ImmediatePay. MyPay, etc. Each of these names is just another way to promote Earned Wage Access.

the benefit that PayActiv offers is always called “Earned Wage Access” or on some occasion, Timely Access to Earned Wages, Tips and Mileage.

Never Early. Never Advance. Never Loan.

If you’ve earned it, and you need it, you should have access to it.

* This is in contrast to rent, which you pay in advance and usually monthly. Holding employee wages for a fixed period of time is a universal practice and has been there for thousands of years.