Exploring Earned Wage Access as a Liquidity Solution

Many households struggle to find the money to pay for day-to-day or unexpected expenses. One of the underlying issues driving these short-term liquidity challenges is a timing mismatch between when people must pay for expenses and when they receive income. This is particularly acute for people whose regular expenses exceed their regular income or for people who have limited ways to pay for a financial shock. Among the products and services that have sought to solve these challenges, earned wage access (EWA) is the solution of choice for a small but growing number of people. 

Earned wage access, also known as on-demand pay, allows users to access some or all of the wages from their next paycheck before their next scheduled payday. Better understanding how users are leveraging EWA is imperative for providers and employers as they continue to invest in it, for policymakers as they regulate it, and for consumers as they turn to it. This brief explores how and why people use EWA, how it has complemented or changed their financial behavior, and how using EWA is impacting their financial health. To gather these insights, the Financial Health Network collected qualitative data through a three-day online discussion board of 21 users of EWA.