earned wage access payday loans benefits

Earned Wage Access vs. Payday Loans

As more and more American workers live paycheck to paycheck without emergency savings, employers and third-party organizations aim to bridge the gap with solutions like payday loans and Earned Wage Access.

Payday loans are funds loaned to an employee until payday, at which point they must repay the loan plus interest. Earned Wage Access is a benefit program employers can extend to their employees that allows them to access their wages as soon as they earn them rather than waiting for payday. 

Both solutions can help employees get cash between pay dates to cover emergencies and unexpected expenses. Still, they have distinct differences that change the way they help and the overall benefit they offer. 


Earned Wage Access is a benefit program that makes wages available to employees as soon as they earn them so they don’t have to wait until payday. Earned Wage Access is typically offered through an employer, streamlining the withdrawal and recordkeeping processes and building employee trust. Employees who have access will log in to their payroll or EWA portal, where the percentage of their earned and available pay is displayed, and withdraw it on demand with the click of a button. 

Benefits of EWA include: 

  • Earned Wage Access is not a loan, so there is no debt accumulation or interest
  • EWA programs are integrated with your payroll system, facilitating trust and accuracy
  • Employees are more likely to stay with their employer when EWA is offered

Perhaps most importantly, employers who offer financial wellness benefits see benefits across all areas: improved attendance, lower experience rates, reduced turnover, enhanced employee engagement, and more successful recruitment. 


Payday lenders typically offer payday loans not associated with any specific employer or benefit plan. To get a payday loan, an employee would have to locate a local lender, complete the necessary application, supply supporting documentation like identification, pay stubs, and bank statements, receive funds, and repay those funds at a high-interest rate the next time they get paid. The employee often must agree to an automatic withdrawal on payday to ensure repayment. 

Payday loans can harm an employee’s financial situation. Employees already living paycheck to paycheck typically cannot afford to pay back the loan plus interest, so automatic withdrawal on payday can leave them unable to pay their scheduled bills, buy groceries, and make ends meet. As a result, they may need to get another payday loan, and in the long term, that leaves them losing a significant percentage of their pay to interest every pay period to meet their basic needs.


Earned Wage Access and payday loans have little in common. The more you understand, the more informed and educated decision you can make.


Payday Loans

Earned Wage Access







Integrated with Payroll System



Payback Required



High Interest Rate


Additional Documents Required X




From an employer perspective, payday loans happen outside of the workplace. While this might seem advantageous, the downstream outcomes ultimately hurt the employee and their employer. When employees get caught up in the payday loan debt cycle, they have difficulty making ends meet and paying for basic expenses like transportation and childcare.

As a result, they can experience difficulty getting to work, increased stress, decreased productivity, and increased healthcare expenses, driving up organizational costs. On the other hand, EWA is employer-sponsored and can be employer-paid, employee-paid, or split. While this requires a little lift on the front end, the long-term impacts produce a high ROI: improved well-being, productivity, attendance, engagement, and retention.

The employee perspective is similar. Payday loans aren’t employer supported or sponsored, which can leave an employee feeling like their company doesn’t care about the hardships they face. The challenges that come with short-term, high-interest loans can leave them in an even more challenging financial situation. EWA answers the call by offering a trusted and affordable option for on-demand funds. 


ASAP Payroll partners with EWA providers to make the integration seamless for employers. We can help you set up and maintain your EWA program with little or no knowledge in advance. 

While both EWA and payday loans provide short-term financial relief, EWA is a more sustainable and employee-friendly solution. By offering EWA, you can promote financial wellness and improve your employees’ overall job satisfaction and productivity.

Stay ahead of the curve when offering progressive benefits demonstrating your care and concern for your employees’ balance and well-being. Ask how we can help at ASAP Payroll today!

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