Long-time readers will know I love earned wage access (EWA). I think it is one of the most effective fintech innovations in moving the needle on financial health.
Payday lending became widespread primarily because employers tied up their employees’ wages, only releasing them on payday. That is quickly changing.
First, it was Nevada, then came Missouri, and now Wisconsin becomes the third state to enact legislation regulating EWA. Governor Evers signed Assembly Bill 574 into law earlier this week. The new law creates a regulatory framework for EWA that was supported by the American Fintech Council as well as industry leader DailyPay who released this announcement today.
The bipartisan bill creates a licensing regime within the Wisconsin Division of Banking once the bill goes into effect in six months.
In the absence of any political will at the national level to tackle this critical issue, it is up to the states to take the lead.
Once everyone has access to their earned wages whenever they want, we will dramatically reduce the demand for payday loans. And that will lead to a significant improvement in overall financial health.
Look out for a deeper dive into the regulation of earned wage access by Tony Zerucha coming shortly.