Top 3 Misconceptions About Earned Wage Access (EWA)

Earned Wage Access (EWA) is transforming how employees manage their finances, yet misconceptions persist. Here are the top three misconceptions about EWA and the truth behind them.

1. EWA is a Loan

Many people mistakenly believe that EWA is the same as taking out a loan. This misconception likely arises from the fact that both provide quick access to money. However, unlike loans, EWA does not involve borrowing money. Instead, employees access a portion of their already earned wages, without any interest or late fees. For instance, if an employee needs Ksh 3,000 before payday, EWA allows them to access that amount from their earned salary without incurring any additional debt or interest​.

2. It Will Disrupt Payroll Processes

Another common misconception is that EWA complicates payroll processes. Most employers worry about the logistics of providing early wage access and its impact on cash flow. In reality, HR and Payroll systems like Workpay, seamlessly integrate EWA deductions so that payroll time is a breeze. These systems track available funds in real-time, ensuring that employees can access their wages without adding extra work for payroll departments. The EWA providers handle the cash flow, and deductions are made automatically during the regular payroll cycle​.

3. Employees Will Spend All Their Earnings Before Payday

There is a fear that giving employees early access to their wages will lead to irresponsible spending, leaving them with no money on payday. EWA providers like workpay work with employers to limit access to a portion of accrued wages, often around 30% of the net pay. 

This ensures that employees still receive a significant portion of their salary on payday. For employees, having access to funds during emergencies also prevent them from resorting to high-interest loans or dipping into savings, promoting better financial stability in the long run​​.

EWA is a valuable tool for financial empowerment, offering employees flexibility without the pitfalls of traditional loans. By debunking these misconceptions, employers can better understand and leverage EWA to enhance employee well-being and satisfaction.

For more insights into how EWA can benefit your workforce, visit Workpay or talk to someone in our team.