Sunday , August 14, 2022

Payactiv, a Pioneer in Earned Wage Access, Scraps Access Fees Following a CFPB Action

Payactiv Inc., a payments provider said to have pioneered the field of earned-wage access, said late Thursday it is scrapping its access fees. The move makes several of the company’s options, including automated clearing house transfers, “completely free,” the San Jose, Calif.-based company says.

Payactiv’s action follows a move this week by the Consumer Financial Protection Bureau to end, at Payactiv’s request, a so-called sandbox deal granted during the Trump Administration that extended to the company “temporary safe harbor from liability” related to certain lending regulations. Under its new director, Rohit Chopra, the CFPB has taken a much more activist stance regarding regulation than was the case during the Trump years.

For its part, Payactiv says it originally waived EWA fees in 2020 at the start of the pandemic. Now, it says, it is the one taking the initiative, pulling out of the CFPB deal and initiating the elimination of fees. “To rapidly offer these additional zero-cost options, we opted to withdraw from the company-specific 2020 CFPB Approval Order,” Payactiv’s chief executive, Safwan Shah, said in a statement. Information was not immediately available regarding what the fees were and what they represented in total revenue to Payactiv.

Earned-wage access allows workers to electronically tap their wages via an app before the designated payday and transfer the funds to a bank account or debit card. They can also receive cash at Walmart stores, says Payactiv, an early provider of the service, which is also sometimes called an advance on wages. Payactiv reimburses itself via a deduction from the employee’s paycheck, earning a profit via fees. The company says its move to drop access fees will take effect for all new and current clients in the third quarter. It expects most employers to adopt the new pricing approach by the end of the year.

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