Embracing FinTech: How CFPB Can Unlock the Future of Earned Wage Access

This article was originally published in Real Clear Markets.

The Consumer Financial Protection Bureau (CFPB) has occupied many headlines lately, but the change in leadership largely reflects a different approach to consumer empowerment than a departure in priorities. Among the many ways that the Trump Administration can improve on the status quo is the treatment of earned wage access (EWA) products by the Consumer Financial Protection Bureau (CFPB). EWA products allow employees to access a portion of their earned wages before payday, often for a small fee or free. The cost to employees is significantly lower than other options, including payday loans that often carry annual percentage rates (APRs) exceeding 300%. EWA fees typically range from $1 to $5 per transaction or are covered through alternative funding mechanisms like merchant interchange fees.

EWA providers do not charge interest, require collateral, or impose penalties for non-repayment. More importantly, because EWA draws on wages already earned, it does not create new debt obligations for workers. Some providers integrate directly with payroll systems, ensuring that any advance is automatically deducted from the employee’s next paycheck, eliminating default risk. This structure allows EWA fees to remain lower than traditional short-term credit options while offering a more transparent alternative to overdraft fees and high-cost lending.

Companies already serving consumer financial needs are well-positioned to expand into this space. Chime’s MyPay, for instance, enables consumers to access wages on their own schedule without hidden costs by connecting directly to payroll systems and leveraging merchant-funded models. Instead of employers taking the easy way out by pushing costs onto workers (i.e., “paying for their pay”), they can explore partnerships with FinTech providers and challenger banks to drive innovation in benefits delivery. This shift could not only lower costs, but also increase financial stability for employees who currently live paycheck to paycheck.

However, previous CFPB leadership made such FinTech partnerships tougher by classifying EWA programs as a type of consumer loan. That categorization imposed costly regulatory requirements under the Truth in Lending Act (TILA), treating EWA advances as if they were traditional credit products. TILA mandates extensive disclosures, compliance costs, and risk assessments that are unnecessary for a product that simply provides early access to wages. This regulatory burden raises the cost of providing EWA, forcing providers to either pass higher costs onto employees or exit the market altogether, reducing financial flexibility for workers.

With a new CFPB director expected to take a fresh look at these regulations, the opportunity exists to rethink the treatment of EWA in a way that balances consumer protection with financial innovation. There is no doubt that we need some regulations to set guardrails for markets, but the overarching concern is that we have witnessed a proliferation of regulations that do little to advance consumer safety, but instead generate unintended consequences, as my work with Alberto Rossi in 2020 has shown. Policymakers should focus on ensuring transparency and cost efficiency and allowing EWA providers to build models that eliminate fees for employees.

One such model leverages merchant interchange fees and employer partnerships to fund EWA services. When employees access their wages through an EWA-linked card, merchants pay a small fee—typically around 1%—which can be reinvested into funding wage advances. This creates a sustainable revenue stream without burdening workers with direct fees. Some fintech firms, like Chime’s MyPay, have already adopted this approach, offering free EWA services by integrating directly with payroll providers and employer benefits programs.

For employers, EWA programs also offer cost savings. Running payroll more frequently is expensive and administratively complex, and EWA provides a way to give employees financial flexibility without increasing payroll cycles. In turn, this reduces reliance on predatory payday lenders, which research has linked to higher bankruptcy rates among low-income workers.

While former director Rohit Chopra’s tenure at the CFPB has ended, the broader goal of improving financial access for workers remains. Regulatory compliance for the sake of it is empty, but fostering a financial ecosystem where innovation lowers costs for workers and expands economic opportunity should be the priority. Reclassifying EWA as something other than a loan is a first step in that process, but it reflects many more opportunities to modernize financial regulations in ways that enhance worker financial stability without stifling innovation.