Letter to CFPB on the Proposed Interpretive Rule on Earned Wage Access Products

Dear Director Chopra,

The American Bankers Association (ABA) appreciates the opportunity to comment on the Consumer Financial Protection Bureau’s (Bureau) proposed interpretive rule governing earned wage access (EWA) products. EWA products allow an employee access to his or her earned wages prior to the employee's payday, typically without requiring any fee or other payment from the employee.

I. Introduction and Summary of Comment

Americans continue to have significant short-term liquidity needs. Thirty-seven percent of adults said they would not cover a hypothetical $400 emergency expense exclusively using cash or its equivalent, which is an increase from 2021. ABA has long advocated for regulatory policies that ensure consumers have a wide range of options within the regulated banking industry to pay emergency expenses, address timing misalignments between deposits and payments, and meet other short-term, small dollar liquidity needs. A vibrant market should include credit cards, installment loans, single payment loans, overdraft, "buy now, pay later" products—and earned wage access products.

EWA products allow an employee access to earned wages prior to the employee's payday. Typically, the bank or third-party provider enables employees to request a certain amount (or share) of accrued wages, which are then disbursed to the employee prior to the employee’s payday. On or around payday, the bank or provider recoups the funds from the employer through payroll deductions or bank account debits. ABA members report that bank-provided and bank-supported EWA programs typically offer this service at no cost to the employee unless the employee elects expedited access in return for a fee – a fee that is analogous to the fees charged by FedEx, UPS, and the Postal Service for expedited shipping so that the consumer may receive a package more quickly than through standard shipping.

Banks engage in providing EWA services primarily because it advances the bank’s relationship with the employer and with the employer’s employees—not because the product generates significant revenue for the bank. Employers are more likely to use a bank’s services if the bank offers EWA, and the employer’s employees are more likely to bank with the bank from which it receives its payroll.

If finalized as proposed, the Bureau’s interpretive rule will discourage banks from offering EWA products, limiting access to a convenient and potentially free source of small dollar, short-term liquidity.

Download the comment letter to read the full text.