Earned Wage Access Hits Regulatory Gridlock as Instant Payouts Fill the Gap

Getting money faster and on demand isn’t just a bonus. For those living paycheck to paycheck, it’s often the only buffer between making rent or falling behind.

The decades-old practice of waiting out two-week paychecks is giving way to more fluid, cash flow-friendly options.

Earned wage access (EWA) allows employees to tap into wages they’ve already earned but haven’t yet been paid under the traditional payroll schedule. Instead of waiting for the next scheduled payday, EWA services let workers access some portion of those accrued earnings early.

Regulatory uncertainty around EWA remains high. More than a year ago, in July, the Consumer Financial Protection Bureau (CFPB) proposed classifying EWA and paycheck advance products as consumer loans, which would have forced providers to comply with disclosure requirements, interest-rate caps or other rules under consumer lending statutes. The CFPB is itself going through seismic changes, with the actual scope of “top down” regulation remaining a bit murky.

Critics, such as industry trade groups including the American Bankers Association, have charged that the CFPB’s summer 2024 proposal would discourage providers including banks from offering EWA.

On the state side, activity is accelerating. For instance:

Utah passed the Earned Wage Access Services Act, effective last May, putting in registration, renewal and enforcement rules via its Division of Consumer Protection.

Arkansas has required that at least one no-cost option be offered to users.

Connecticut and California have adopted laws classifying some EWA offerings as loans.

New York State Attorney General sued EWA providers DailyPay and MoneyLion alleging their fees amount to abusive lending (interest rates up to 750% in some claims).

Thus, while many workers and employers are embracing EWA, the legal framework is fragmented and often contested.

PYMNTS Intelligence has noted that 83% of workers surveyed said that they prefer daily access to wages rather than having to wait for scheduled paydays.

Work Around the Limbo

If regulators classify EWA as credit/loan, many providers may need to change disclosure, underwriting or licensing practices, which might push up costs or reduce availability. And because rules differ by state, employers/providers operating in multiple states face complexity in compliance.

Because EWA continues in regulatory limbo in many jurisdictions, instant payouts and payroll advances are emerging as de facto workarounds. They satisfy many of the same needs: getting access to money sooner, more frequently, breaking the grip of the traditional two-paycheck cycle.

Our report “Measuring Consumer Satisfaction With Instant Payouts,” found 77% of consumers opt to receive instant payments for income and earnings disbursements when available. Companies facing staffing shortages or high turnover see EWA or instant pay as a differentiator. Millennials and younger workers expect this kind of flexibility.

Payroll advances also appear to be in demand. Some providers allow workers to draw on small amounts of accrued wages in advance (often through apps), sometimes with fees or membership costs, sometimes free. For example, Würk has recently integrated DailyPay’s On-Demand Pay into its payroll/HR platform, giving workers early access to earnings via that system.

Similarly, larger platforms are building out connections: Workday expanded its partnership with DailyPay so more businesses using Workday HR/Payroll can offer on-demand pay.

These solutions provide flexibility and speed even where state regulation or federal rulemaking has not fully resolved EWA’s status. Instant payout rails, payroll tools, and employer-based advances reduce friction, letting workers address urgent expenses without waiting for payday or relying on more dangerous credit paths.