Despite U.S. stock indexes soaring to continuous record highs throughout the past year, most everyday Americans are not a part of that prosperity. Recent studies show nearly 7 in 10 Americans are living paycheck to paycheck, and the Federal Reserve in 2025 found that almost 40% of consumers don’t even have access to $400 to cover an emergency expense.
Gay Dempsey, CEO of Bank of Lincoln County, a subsidiary of the $220 million BOLC Corp., based in Fayetteville, Tennessee, sees it first hand. “We can see from our customers’ transaction history, we can see people that are using the payday lenders quite a bit,” Dempsey says.
That’s why she took an immediate interest in the possibility of offering an earned wage access tool through Bank of Lincoln County. Earned wage access, often referred to as EWA, is exactly what it sounds like. It allows a consumer to receive an advance on money they’ve already earned prior to payday in exchange for a fee. That advance is then reimbursed back to the EWA provider once the person receives their paycheck.
Dempsey first realized it might be possible to offer EWA to her customers when she learned the fintech company Clockout had developed a tool specifically designed for banks and credit unions. “Just the simplicity of it and the ease with which it will integrate with our current system is really what led me to go with them. And also, I just think it’s so reasonable for the customer,” Dempsey says. “They just add their bank account with us. They can go out there [on Clockout] and find their employer. I’ve just been blown away at the integration that exists with all the payroll providers, and so it’s pretty seamless for them.”
Clockout Founder and CEO Juan Jurado-Blanco believes his product is a game-changer for smaller financial institutions, and his goal is ambitious. He wants Clockout to do for earned wage access what Zelle did for peer-to-peer payments.
“It’s ultimately more convenient to do everything in your banking app rather than any additional fintech app that you have on your phone,” he says. “You can use this at any job at any time, as long as you’re the bank’s customer. You have your payroll account linked and you have your direct deposit, and we believe this will become table stakes in the next 18 to 24 months.”
A New Model
A handful of larger banks already offer earned wage access to the employees of their commercial customers. PNC Financial Services Group, based in Pittsburgh, Pennsylvania, launched PNC EarnedIt in February 2022. Partnering with the fintech DailyPay, PNC has grown EarnedIt to include more than 50 employers with over 170,000 employees who can access part of their pay early.
Tom Lang, head of treasury management product and operations for PNC, says instant payments are critically important in helping those commercial clients manage working capital. “And that’s a big driver of what makes these earned wage access solutions able to exist today. Ten years ago, they didn’t really exist,” Lang says. “If you take those two in combination, it was a really nice intersection of being able to offer an innovative solution that helps both our employers, but ultimately, their end employee.”
U.S. Bank offers a similar employer-based EWA program in partnership with the fintech Payactiv. But offering earned wage access directly to consumers is new territory for financial institutions. It has instead been the domain of fintechs like Chime, Dave and others.
James Chemplavil, the CEO and founder of Salus, a fintech company that has launched its own earned wage access tool specifically for credit unions, thinks it is crucial for smaller financial institutions to become active in this space. “This is a short-term liquidity product that younger consumers, particularly Gen Zs and millennials, are actively using in the marketplace,” he says. “And if credit unions and community banks aren’t offering it to them, then they are getting that product from online providers and they’re getting it from the online neobanks that are challenging for market share.”
Dempsey believes earned wage access can actually help customers of all ages, but agrees it will give Bank of Lincoln County a foot in the door with a new generation. “I think about people in that age group that don’t know a banker,” she says. “And so, if they can actually know a banker and know someone to call when they are ready to buy that car or are ready to buy that house, then yeah, I think it’ll make a difference in their lives.”
By building relationships with younger consumers and growing the bank’s deposit base, Dempsey also sees a way for the tool to be a long-term revenue generator. But she is merely hoping to break even in the short-term by having the customer fees cover the cost of the service. Bank of Lincoln County is still determining how much to charge for a fee and what percentage of each paycheck a person will be allowed to access. Dempsey hopes to roll out the service to all bank customers in 60 to 90 days.
Jurado-Blanco expects most institutions will charge between $2 and $3 per instant cash advance, but says Clockout’s service also allows them to offer a no-cost option for customers.
Free From Regulatory Pressures?
Due to concerns about direct-to-consumer earned wage access providers charging deceptively high fees or failing to disclose their terms, 12 states have passed legislation or applied existing laws to regulate them, while at least 19 others have legislation that is pending. The most restrictive state laws and regulations, such as those in Connecticut and California, treat earned wage access products like loans, subjecting them to stricter requirements. Others impose limits on advances or cap fees, while some also require providers to obtain special licenses.
U.S. district courts in California and Washington have also ruled that some earned wage access products legally meet the definition of credit (loans) under the federal Truth in Lending Act and Military Lending Act.
Those laws and the legal battles stemming from them have resulted in a backlash from the fintech providers and the trade associations that support them. They are now vocally supporting a congressional bill authored by Rep. Bryan Steil (R-Wis.) that would prevent earned wage access products from being treated as credit. But while the fintech providers fight those battles, most of the state laws on earned wage access either specifically exempt regulated financial institutions or do not address them.
Jurado-Blanco says that puts banks and credit unions at an even greater competitive advantage. “It’s a big barrier for the current [fintech] players in the market and also an even bigger barrier for new innovators that want to come in,” he says.
Bank of Lincoln County’s Dempsey thinks integrating a service like earned wage access through a bank simply makes more sense from a regulatory standpoint. But she also believes the banking industry will do far more than nonbank providers to assist people in need of financial literacy and wellness. Dempsey says that should be the overarching goal associated with earned wage access. “I think we can use this as a tool to get out and use it for teaching and education, but then also as a tool to help people with their budgeting,” she says.
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