The CFPB's Guidelines for Earned Wage Access

Earned wage access (EWA) or “on-demand pay” has been surging in popularity, especially over the last year. Our research found that early access to earned wages tied for second alongside sick pay as the most sought after benefit after bonus pay. About 94% of hourly workers also considered accessing their earnings ahead of payday helpful. Recognizing the growing demand for earned wage access, the Consumer Financial Protection Bureau (CFPB) has released guidance and greater clarity on best practices for the industry. We’re excited to share that it reinforces the model we’ve set up over the last couple of years, and Branch’s employer-based EWA model is thoroughly aligned with the CFPB’s opinion:

In fact, we've been aligned for awhile. Since becoming the first earned wage access provider to provide instant advances for free in 2019, Branch has been committed to offering fee-free financial services that can help hourly employees gain financial stability and help the companies they work for modernize their payroll processes and payment methods. As such, Branch’s employer-based EWA offering aligned with the CFPB’s position on the industry, even before the Advisory Opinion was formally issued. Here’s how:

Employer-based

Branch works directly with employers to offer EWA to employees, per the CFPB’s guidance. Without having to change payroll processes, we integrate directly into employers’ time and attendance systems to confirm who their employees are, when they’ve worked, and how much they’ve earned. We were encouraged even more when the CFPB issued an Approval Order under their CAS Policy that further solidifies the CFPB’s position on employer-based EWA.

Advancing only earned wages

Because we have the specifics of when and how long workers have worked, we can accurately calculate how much they’ve earned in order to provide an advance. We work closely with employers to set guardrails that limit an employee’s access, to up to 50% of earned wages. We want to help workers get ahead financially, and that means helping them access their earned wages in a responsible way. 


Processed via payroll deduction

Branch provides the capital so that employers don’t have to worry about cash flow. We recover EWA transactions through employer-facilitated payroll deductions from the next paycheck. Aligned with payroll administrative processes, we allow payroll administrators greater visibility and control. 


Free reasonable access

Branch accounts and instant transactions into the Branch Wallet are free, because we believe that the point of offering these financial services to working Americans is to help them gain financial stability. Overdraft fees or other charges can take a big toll on people who are working paycheck to paycheck. We didn’t want to monetize and encourage EWA transactions or fees, but offer employees a safe, convenient tool when they need it most.

Committed to staying compliant

Since this space is constantly evolving, we’re examining these changes closely and regularly communicating with partners and regulators. To make sure we stay compliant for our customers, we find the best approach is to ensure we’re transparent and building products in the best interest of our users. We’re always thinking of ways to improve financial wellness, eliminate fees, and help working Americans using Branch grow financially. 

Interested in adopting a compliant earned wage access solution that benefits you AND your employees? Contact us at sales@branchapp.com

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