What is Earned wage access, and why does it matter?

What is Earned wage access, and why does it matter?

Rain Team

February 22, 2022

The what

Earned wage access (EWA) can go by many names, like on-demand pay, daily pay benefit, instant pay, or earned income access. However, all these names refer to a solution that does the same essential thing: a financial wellness program that essentially allows employees access to their money as soon as they've earned it. It helps employees access wages they have already made before payday comes. Enabling them to manage cash-flow emergencies using their resources while safely avoiding other predatory financial solutions like payday loans or credit card debt.

Earned wage access helps employees, but it is advantageous for businesses, too. 

Employee Benefits News referred to EWA as "the most important benefit in a post-COVID-19 world," quoting PwC's Employee Financial Wellness Survey, which found that "47% of employees are stressed with their financial situation." Employers can address employee financial stress by offering EWA, which adversely impacts the company due to lost productivity. Simultaneously, EWA positively impacts retention and the employee experience benefitting the employer.

The why

The financial state of an employee has a noticeable influence on their performance levels. Financial stress can adversely impact workplace productivity. Be it the pandemic, home loans, or student debt, so many factors could stress an individual and keep their talents from shining through.

Access to earned wages is a fundamental foundation for employee financial wellness. Earned Wage Access helps plenty in such situations. For instance, one may need a wage advance if the bills exceed the payroll amount, unexpected bills go unpaid, or sudden medical expenses. 

Therefore, when employees have access to their earnings before payday, urgent financial needs can be dealt with without turning to other financial products as a solution. 

However, these "solutions" often worsen workers: Payday loans are debt traps. Credit cards can pose risks, with low rates that jump much higher and balances nearly impossible for workers to pay down. 

If employees live paycheck to paycheck and do not have the safety net of emergency savings in unexpected situations, having access to earned wages can make a tragedy seem like a not-so-major hurdle. 

One of the most potent things employers can do to support employee financial stability is to help them build emergency savings so that employees can manage their financial scares without external intervention. Earned wage access is definitely the first step. 

Once implemented, Earned Wage Access delivers benefits that spread far and wide throughout the company. It lets employees assume control over when they are paid, allowing them to align their pay dates with their financial commitments. 

Earned wage access helps stabilize employees at the moment. A financial wellness solution that includes acquired wage access, among other features — like planning, spending, budgeting, and spending — will help employees achieve proper financial stability.

As much as EWA is a valuable tool for employees, you might wonder why a company would care about someone's personal financial well-being. Believe it or not, the benefits are double-sided — the companies that implement EWA for their staff reap the benefits too.

A win-win situation

EWA is a tremendous win-win solution for both the employees and the employers. 

  1. EWA increases shift coverage. With EWA, financial issues can be dealt with faster and effortlessly. The employees get paid early, and the employer secures financial satisfaction, which grants productivity.
  2. EWA can help decrease employee turnover. According to a report by Visa Insights, around 80% of employees said they would stay with an employer longer if they were offered EWA. Some live from paycheck to paycheck, and they would simply not continue working for a company that doesn't provide EWA because they miss this crucial benefit.
  3. EWA helps attract new talent. Of course, EWA helps you retain talent, but it can also help attract new recruits. Adding EWA as a part of benefits in a job description can cause a significant number of increases in the applicants.
  4. It builds a trustworthy environment at the workplace. The most important benefit of it all. Businesses thrive when there's harmony among team members. EWA makes employees feel valued and cared for, which boosts their performance. With this being said, employers can reap positive benefits and create stronger bonds with their employees.

We live in an era where people tend to look for instant gratification in almost all parts of their lives. We also live in a generation where many people face increasing pressures on their finances and often need fast access to their wages to meet their financial obligations. Earned Wage Access (EWA) possesses the ability to address both of these demands. This explains why it's gaining popularity in many businesses around the world.

Earned Wage Access represents a significant shift in how employees are rewarded for the work they do. Instead of receiving their pay at fixed, pre-agreed intervals - usually the end of the month - employees accrue income daily. Then, at any time they wish, employees can withdraw a particular amount of the pay they have accrued, giving them unprecedented control over their finances.

Rain has been developed keeping all of the above mentioned in mind. We prioritize the need to eliminate financial stress in the fast-paced world we live in. Our mission is to get rid of financial predators like payday loans. For this, Rain offers instant access. You get paid as soon as you complete the verification process. The one-time, hassle-free repayment option also enables the user to not go through the hefty process of EMIs. 

The entire process from start to end is digital. Users can submit documents through the app, and all transactions are digital as well. 

Furthermore, employees using Rain's on-demand pay platform can avoid thousands in fees and interest that would have otherwise gone to banks, payday lenders, and credit card companies by turning to earned wage access in moments of need.

EWA is suitable for everyone—your business, employees, and customers. We think you will love it, so get in touch with us to learn how to get started.