The Consumer Financial Protection Bureau (CFPB) recently released a data spotlight on developments in the paycheck advance market, providing valuable insights into the growing Earned Wage Access (EWA) industry. This report highlights several key findings that underscore the importance of innovative solutions like Bridgeover, in the employee financial wellness space.
Key Takeaways From The CFPB Report
Rapid Market Growth: The EWA market has expanded significantly, with employer-partnered transactions nearly doubling since 2020. In 2022, an estimated 7.2 million workers accessed $22.8 billion through these services.
High Repeat Usage: On average, workers used EWA products 27 times per year, with nearly 50% using them at least once a month in 2022.
Fee Structures: While many EWA providers advertise free options, about 90% of workers paid at least one fee, primarily for expedited transfers. The average fee was $3.18 per transaction.
Potential Costs: Based on average usage patterns, the CFPB calculated an illustrative APR of 109.5% for a typical transaction, though actual rates can vary widely.
Limited Employer Subsidization: Less than 5% of total fees were covered by employers, leaving most costs to employees.
Why Our Solution Stands Out
Given these findings, our approach offers several distinct advantages, for both employers and employees:
Truly Free for Employees: Unlike most EWA ( Earned Wage Access ) providers, Bridgeover don’t charge any fees to employees, eliminating the hidden costs highlighted in the CFPB report.
Employer-Funded Model: Our financial support for workers encourages employer subsidization, addressing the low rate of employer support noted in the study and empowering employers as the providers of real financial benefits to their employees.
Financial Education Focus: We emphasize financial literacy and budgeting tools to help break the cycle of repeat usage observed in the CFPB data.
Transparent and Ethical: Our model avoids the high APRs and potentially misleading “free” marketing tactics mentioned in the report
Holistic Financial Wellness: Rather than just providing short-term liquidity, we offer a comprehensive approach to improving employees’ long-term financial health, encouraging responsible financial behavior
The CFPB’s data spotlight underscores the growing demand for financial flexibility & financial support for workers, but also highlights the potential pitfalls of many current EWA offerings. Bridgeover’s financial support for workers program addresses these concerns head-on, providing a more equitable, transparent, and truly beneficial option for both employees and employers.
