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Dive Brief:
- Missouri Gov. Michael Parson signed into law bipartisan legislation regarding earned wage access last Thursday, according to a press release from the Republican’s office. Missouri is the second state, after Nevada, to pass legislation regarding the burgeoning industry, say organizations tracking the bills.
- Any company in Missouri seeking to provide such EWA services, which offer workers access to money they’ve earned and not yet received from an employer, will be required to register with the Missouri Department of Finance, pay a $1,000 registration fee and maintain payment records for at least two years, according to the text of the bill.
- “Missouri families should have the ability to access the wages they have already earned from responsible companies that are providing an alternative to high-priced payday and other predatory options,” American Fintech Council CEO Phil Goldfeder said in a Friday press release.
Dive Insight:
Missouri may have to change its nickname to the “show-me-the-money” state. In a letter last month to Parson from companies and groups backing the legislation, they leaned on existing use of EWA to make a case for passage of the law.
“It is estimated that over 130,000 Missourians have used an EWA product, and over 600 employers offer it to their employees,” according to the June industry group letter. And while that’s only 5% of the 2.5 million employed in the state, the new law represents a significant step forward for an industry that the letter said has served Missourians for nearly a decade.
Some of the backers include the earned wage access providers Payactiv, DailyPay and EarnIn as well as the industry organizations American Fintech Council and Financial Technology Association.
“We applaud Missouri for passing bipartisan legislation supporting responsible innovation and giving consumers greater financial freedom,” the association’s CEO, Penny Lee, said in an emailed statement. “We call on other states to follow suit.”
Legislation relating to earned wage access, also known as on-demand pay, has been considered in states such as California, Georgia, New Jersey, New York, North Carolina, South Carolina and Utah.
“We are excited that Missouri has become the second state to recognize our positive impact on consumers and codify best practices for our industry by requiring strong protections for Missouri’s consumers,” DailyPay CEO Kevin Coop said in an emailed statement.
But the new law is being met with skepticism from some consumer advocacy groups. The National Consumer Law Center, which had been critical of Nevada’s law, expressed concern that EWA was not being treated like payday lending, which the FDIC has said presents “significant risks.”
“It is disappointing that a second state bought the myth that fintech payday loans that advance pay ahead of payday are not loans, adopting a bill without any limits on the cost of the advances,” National Consumer Law Center Associate Director Lauren Saunders said in an emailed statement.
In the meantime, EWA startups seem to keep finding capital to fund their operations. According to a report by TechCrunch, the fintech Clair recently received $25 million from venture capital firms and has outsourced its lending risk to partner bank Pathward.
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