What is EWA, and Why Are More Employers Offering It?

October 27, 2022

Between rising inflation and other challenges, your employees are facing more and more financial pressures. What can you do to ease their stress and make your small business more competitive in the process?

Earned wage access, or EWA, offers a possible solution. This addition to your benefits package can give your employees additional financial flexibility while increasing your ability to find and retain top talent. In this article, we'll explain what EWA is, how it works, and the benefits it can provide to small business owners and startup founders.

[Adding EWA] to your benefits package can give your employees additional financial flexibility while increasing your ability to find and retain top talent.

What is Earned Wage Access (EWA)?

Traditionally, employees are paid on a preset cycle. Depending on your business, you might pay them weekly, biweekly, monthly, or bimonthly. This system generally works &#151 but it does have limitations.

A rigid pay schedule can put a burden on employees. For monthly payment plans in particular, members of your team can see their cash situation get extremely thin as the month wears on. Meanwhile, unexpected expenses can complicate budgets and put people in difficult circumstances.

Earned wage access, or EWA, can ease this pressure. Unlike outside funding alternatives available to your employees, EWA is not a loan. As the name implies, it offers your employees access to the wages they have already earned.

Under traditional payroll structures, where your workers only receive their funds in large chunks every couple of weeks, an EWA model makes at least a portion of the cash available as it's accrued, on a rolling basis.

Why should small businesses enroll in EWA now?

As a startup, your team is crucial to achieving ultimate success. You want their outside lives as stress-free as possible, so they can focus on pushing your business forward. Meanwhile, you want to retain your best talent over the long term.

Both these goals are complicated by a lack of resources. As a small business, you likely have a tight budget &#151 meaning you are trying to get the most out of every dollar. You pay your employees fairly, but you're probably not in the position to give out exorbitant wages.

Meanwhile, the dynamics of the overall economy put pressure on individuals and families. One stat says that nearly two-thirds of Americans (64%) operate paycheck to paycheck.

You can see this dynamic in the persistent popularity of high-interest payday loans. These short-term, high-rate, unsecured loans, usually make a small amount of money available (typically a few hundred dollars). The name stems from the idea that these cash infusions are meant to carry people over until they receive their next paycheck.

Statistics show that some 12 million Americans turn to payday loans each year. This, despite the fact that the APR on these loans can run as high as 664%, depending on state law.

Even if your workers don't rely on these high-rate options, they might still use credit cards to bridge the gap between paychecks. This can also lead to wasted money on their part, as they service the high credit card rates (nothing like payday loans, but still).

EWA can sidestep these flawed solutions. Your employees won't need to depend on expensive loans to carry them over to payday. Rather, they can use their own hard-earned wages to maintain financial security.

Benefits and drawbacks of EWA

We've seen the ways EWA can help your employees. And as concerned as you are for their welfare, you also have to think of the bottom line. Does EWA have upsides for your small business?

The short answer is "yes." Setting up this program can lead to significant benefits. However, there are some drawbacks to consider as well. To help you weigh your options, here are some of the pros and cons of an EWA offering:


You likely already offer a competitive benefits package. EWA plays into this strategy. The goal is to make life easier for your employees on every front possible. This strategy aids your team-building efforts and keeps your employees focused on work, rather than facing the added stress of outside financial pressures.

In return, your business benefits in measurable ways. Studies show that financial wellness programs in general are associated with a nearly 19% increase in retention. Meanwhile, almost eight out of 10 workers (79%) say that they would be willing to change jobs for an employer who offers an EWA program, according to a recent study done by Visa.

Almost eight out of 10 workers (79%) say that they would be willing to change jobs for an employer who offers an EWA program, according to a recent study done by Visa.

Here are a few specific upsides you can expect:

  • Increased Retention
  • Easier Recruiting
  • Increased Employee Satisfaction


The particulars of an EWA program matter. Experience has shown that the offering works best when paired with other budgeting and financial education tools. Otherwise, employees under financial stress just turn it into a new routine.

For instance, an experiment conducted by Walmart found that EWA was associated with higher employee turnover, unless it was paired with an app used to encourage savings and predict earnings. When combined with these other tools, the use of EWA was correlated with higher retention.

The nitty-gritty info about the particular program also matters for you. EWA providers have different structures &#151 including potential fees. You'll need to do some research to find the best setup for you.

Here are some of the drawbacks to look out for:

  • Details Matter
  • Fees Related to EWA
  • Added Complications for Your Payroll

How to get started with EWA

If you decide that an EWA offering would help your small business, it's important to coordinate a smooth launch. You'll also need to understand how to maintain the program over the long term. With that in mind, here are a few tips that will help you get the most out of your EWA decision:

Communicate with Employees

You are putting your EWA program into effect to benefit your employees. As such, their feedback will be helpful in getting the right policies in place. Find ways to include them in the process so you can maximize the value of the investment.

Select an EWA Provider

As a small business, it might be difficult to provide an EWA program on your own. The cash requirements and added effort required for your HR department might cause difficulties.

Instead, look for a partner to help you provide this employee benefit. Many payroll companies offer EWA programs, running the program through their existing applications.

Understand Your Options

There are different ways to structure an EWA program. As you're likely to work with a third-party provider, it's crucial to understand the details. Here are some things to keep in mind:

  • Fee structure
  • Amount of wages available to employees
  • Process for accessing wages (type of app, etc.)
  • Additional support provided (budgeting tools included, etc.)

Choosing if EWA is right for your small business

In difficult financial times, EWA can help employees get by. However, enrolling in EWA also has upside for employers. Your small business can upgrade its ability to recruit and retain top talent by adding this program to your benefits package.

Still, getting the most out of this strategy involves planning and attention to detail. Use the information provided here to determine if EWA is right for your startup or small business.