Fiserv to offer real-time earned wage access via Instant Financial

Fiserv is joining the increasingly crowded market for earned wage access in partnership with Instant Financial.

The companies will integrate Instant Financial’s earned-wage-access technology into Fiserv’s Money Network infrastructure, targeting the more than 4,000 employers currently using the Money Network prepaid payroll card services. The EWA feature will be offered to existing Money Network employers at no additional cost and there will be no charge to consumers who want to access their earned wages ahead of the payday when requesting it through Fiserv’s mobile app or online service.

“We feel that we offer a strong valuation proposition to employers by taking the friction out of payday and enabling their employees to access their wages when they need them," said Dom Morea, senior vice president and head of prepaid at Fiserv.

Fiserv’s expansion into the EWA market comes on the heels of several competitors seeking to expand their infrastructures to capitalize on the opportunity. In April, Comdata, a unit of FleetCor, entered the EWA market earlier this month to leverage its payroll card network which competes with Fiserv. In May 2020, Ceridian entered the EWA market to leverage its time and attendance software solution that currently serves over 4 million workers across the globe.

While the expansion of the EWA marketplace, both in number of providers offering the services and consumers using them, has grown considerably, it has not gone unnoticed by regulators concerned about American being taken advantage of by providers or employers. Most recently the CFPB and California’s Department of Financial Protection and Innovation have made announcements of potential oversight actions in an effort to protect consumers.

Morea noted that Fiserv evaluated its options in entering the EWA market and felt that partnering provided the best solution since a startup, such as Instant Financial, is able to have a singular focus on delivering cutting edge technology to serve EWA users.

The impact for employers in providing EWA to their employees is significant, based on data from Instant Financial. Employers offering Instant Financial’s EWA service have seen 30% more job applicants, 20% lower turnover and 13% lower absenteeism.

“The partnership allows us to deliver solutions in step with how people are living,” said Morea. “We call it getting paid at the speed of life. EWA fits with that demand as a lot of folks want the flexibility of getting paid when they need it, as opposed to having to wait to get paid.”

Employers that integrate the Money Network with EWA into their time, attendance and payroll system can onboard employees, calculate their on-demand pay and disburse funds onto a Money Network prepaid Visa card.

Fiserv’s mobile app currently allows employees to monitor their earnings, budgeting and spending online. The new feature will allow users to request funds at the end of a work shift or anytime after worked hours have been accumulated and the funds are immediately loaded onto a Money Network prepaid card.

Up to 50% of the earned, but not yet paid wages are made available to the employee prior to payday. The prepaid card can be used to make purchases, access in-network ATMs, transfer funds and enable a digital wallet such as Apple Pay and Google Pay.

Fiserv earns its money from employers as the payroll card program manager and earns interchange when the Money Network cards are used for purchases.

The EWA market has recently blossomed in popularity and moved from a niche product to a mainstream financial service as more Americans struggle to cope with the financial pressures of dealing with the havoc wrought by the pandemic. Data from the American Payroll Association revealed that 69% of Americans are living paycheck-to-paycheck.

Based on data from the PaymentsSource Future of Money Survey released in November 2020, 14% of U.S. adults are regular EWA users. However, EWA usage is much heavier among young adults, minorities and those who are financially strapped. Almost one third of underbanked adults, those who have used an AFS provider such as a payday lender in the last 12 months, are existing EWA users. About 25% of Hispanic adults are EWA users, along with 22% of Gen Z and 26% of millennials compared to 12% of white adults and only 1% of boomers.