If you’re one of the more than a third of Americans who couldn’t afford to cover a $400 emergency, waiting a week or two or longer for a paycheck is a pain, especially if an emergency upends your already tight budget.
For some cash-strapped workers, the solution can be found in an earned wage access app — an increasingly popular service that offers users early pay, often in exchange for a fee, for work they’ve already completed but haven’t yet gotten a paycheck for.
Earned wage access has become an umbrella term for apps that pay out earned wages early, though there are key distinctions among different types of programs. Some of them are integrated directly into employers’ payroll systems to let employees get some of their wages in advance, leaving them with a smaller paycheck on their normal payday. These are offered by some of the biggest employers in the country, including Amazon and Walmart.
Direct-to-consumer early wage access programs, sometimes known as cash advance apps, on the other hand, function more like loans, giving workers their wages in advance based on what they report they’ll earn.
The market for both types of services appears to be growing rapidly. Workers accessed $9.5 billion via early wage access companies like EarnIn, MoneyLion, and DailyPay in 2020, up from $3.2 billion in 2018, according to a report from the research firm Aite Novarica.
The apps are popular across industries that employ low-wage workers, including food service, retail, and gig...
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