EarnIn’s Early Wage Access Card Puts Pressure on Traditional Issuers to Evolve

Financial technology outfit EarnIn has introduced a program called Live Pay that allows people to use the company’s EarnIn Card to access wages they’ve already earned as they accumulate.

The offering signals to financial institutions that they may need to enhance their card programs to meet evolving market needs. 

EarnIn solves a problem countless workers have encountered — waiting for a scheduled payday to get a their hands on their earned wages. 

“We stream music, entertainment, news, sports and more whenever we want — now, with EarnIn Card and Live Pay, you can stream your pay, too,” Ram Palaniappan, EarnIn’s CEO and Founder, said in a press release. “It’s a system that’s always on, always working. It’s a long overdue upgrade to how we get paid.”

The EarnIn Card and Live Pay combination allows workers early access to up to $1,500 of earned wages per pay period. EarnIn reports activity on the EarnIn Card to credit bureaus, enabling customers to build their credit when they make on-time payments.

Workers can access up to $1,500 of earnings per pay period through EarnIn’s programs.

People who previously turned to a secured credit card to build or repair their credit may choose to go with EarnIn’s solutions when they consider the earned wage access (EWA) benefits the company offers. 

Credit card issuers that aim to prevent EarnIn from taking business away from them can review how their current solutions match EarnIn’s offerings and develop product enhancements where necessary.

The introduction of new financial products stands to attract the attention of government agencies that make sure financial companies are fair and transparent in their dealings with consumers.

Earlier this year, the Consumer Financial Protection Bureau (CFPB) revoked an advisory opinion it had issued regarding an earned wage product, but it’s unclear how the agency will examine earned wage solutions in the future.

We asked Alex Jimenez, Lead Principal Consultant with Backbase, whether he believed that new solutions from EarnIn and other companies operating in the same space could cause government agencies such as the CFPB to keep a closer eye on earned wage access programs.

“The CFPB has sent mixed signals on wage access, and this move could just as easily extend the ambiguity,” Jimenez told us. “That uncertainty makes it harder for providers to know where the line really is.”

Ian P. Moloney, Head of Policy and Regulatory Affairs at the American Fintech Council, pointed out that earned wage access transactions are not underwritten like credit and don’t charge interest.

Earned wage access transactions are not loans and should not be treated as such, Moloney said.

“These products remain fundamentally different from credit products,” he said. “Now is the time for the federal government to step in and provide much-needed clarity, not by forcing all tools into existing categories, but by engaging with industry and recognizing the unique characteristics and benefits of each offering.”

Financial institutions may not want to wait around for government agencies to send better signals.

EarnIn is moving full steam ahead with its latest offering. A company spokesperson said that more than 30,000 people joined the waitlist for the new solution within 24 hours after EarnIn opened it.

As the product’s popularity grows, established financial institutions that don’t offer similar programs may lose business to EarnIn.

“That would put pressure on regular banks to come up with a competing service,” Aaron McPherson, Principal at AFM Consulting, told American Banker. “This is a really interesting model, and I would expect other companies to try to imitate it.”