The President of Paywatch Philippines, Rowell Del Fierro, gives The Business Manual an in-depth look at the transformative power of Earned Wage Access.

For today’s Filipino workers, “petsa de peligro” is a real threat to their financial security. While many who live from paycheck to paycheck rely on high-interest informal loans, a win-win solution exists for both employees and employers: Earned Wage Access. In this special feature, Rowell Del Fierro, President of Paywatch Philippines discusses the impact of Earned Wage Access and why many businesses in Asia have adopted it.

Earned Wage Access: Driving Competitive Advantage and Social Impact of Businesses

Led by progressive employers, a wave of interest in Earned Wage Access (EWA) is rising in Asia. EWA, or on-demand pay, is a debt-free financial employee benefit that allows employees to access their earned salary before their payday. It intuitively is a valuable benefit to employees who can now access their earnings to address unforeseen expenses or tide over the stress from “petsa de peligro.” 

A better alternative to high-cost payday loans that improve financial well-being, the benefits of EWA to employees are well-understood. The real question for businesses is whether this employee benefit will translate to a competitive advantage enhancing talent attraction, retention, and workplace productivity. It is a powerful innovation that enhances financial well-being and contributes to societal outcomes, but will it deliver measurable business value?

EWA, or On-Demand Pay, Has Become Mainstream 

To answer this question, we examine the growth of EWA and its sustained adoption by leading the companies in more mature markets where EWA started over a decade ago.  In the US, EWA has become a mainstream tool for employees, with the total value of advanced wages tripling in just two years, soaring from $3.2 billion in 2018 to $9.5 billion in 2020. Major companies such as McDonald’s, Walmart, and Uber, were early adopters of this financial innovation. Today, adoption continues to grow across various industries, such as in technology and BPOs, with companies such as Alorica, TaskUs, Teleperformance, and Telus, as well as ADP, SAP, and WorkDay.  

The COVID-19 pandemic caused many individuals to face financial emergencies, accelerating the adoption of EWA. As the cost of living outpaces wage growth, many consumers, especially those without substantial savings, face significant cash flow challenges. In response, more and more companies are increasingly adopting EWA as a responsible business practice to support their employees. In fact, a recent report indicates that the EWA solution market is projected to grow by 14.9% from 2023 to 2033, reflecting its increasing value in the business world.

Tangible Business Benefits

The global trend of offering earned wage access (EWA) to employees is on the rise, and for good reason: it delivers tangible business benefits. On-demand pay provides enterprises with a variety of benefits, encompassing enhanced HR metrics, heightened employee engagement, and significant financial savings.

One notable benefit is reduced turnover costs through improved employee retention. According to a study by Harvard Business School on one Mexican fintech firm, EWA services enhance worker satisfaction. On average, users are 12% less likely to leave the company in the next pay cycle compared to non-users, controlling for demographic factors. 

Another advantage of EWA is its enhancement of recruitment efforts. Due to widespread interest in early pay access among employees, EWA is frequently cited as a significant factor in attracting talent. According to Visa research, 79% of employees are willing to change jobs to access EWA. As a result, many companies now advertise EWA as a benefit to attract employees. 

EWA also enhances productivity by promoting employee financial health and resilience. By alleviating financial stress that can lead to absenteeism (unexpected absences due to car breakdowns or late bill payments) or presenteeism (when employees are at work but not fully productive due to financial worries), EWA helps employees perform better.

Some companies do express concerns over the potential amount of additional work to run the program. Companies, however, that have implemented the program see how employees value the benefit and, more importantly, the positive impact on the business. EWA providers front the funding of earned wages on behalf of companies and sync up with its existing payroll processes for deduction and repayment, minimizing disruption and additional work. This approach simplifies cash flow management for companies and avoids additional complexities in their processes. 

By adopting EWA, companies also enhance the social aspect of their sustainability strategies. This innovation promotes financial inclusion by giving their workers frequent and prompt access to their earnings and therefore better control over their finances. Providing a debt-free alternative vs. costly payday loans helps prevent debt traps and reliance on predatory lending.

However, an EWA program is financially inclusive only if it is affordable for employees. Fees should not only be nominal but also transparent with no hidden charges.  By offering on-demand access to their earned wages for a small fee and with zero interest, EWA becomes a powerful tool for financial wellness. This innovation enhances employees’ financial control and empowers them to plan and manage their finances more effectively. EWA provides the flexibility to address their financial needs as they happen without having to wait for the next payday. This improves financial stability, and security, and boosts employee productivity, engagement, and retention.  

Gaining Traction in Asia

Given these proven benefits, many companies are adopting earned wage access not only to enhance employee engagement but also to gain a competitive advantage. The flexibility offered by EWA makes it easier for companies to attract and build a sustainable workforce.

Since joining Paywatch, Asia’s leading EWA provider, I’ve seen firsthand how companies leverage EWA to drive significant business value. Paywatch has rapidly expanded since its inception in 2020, now serving over 500,000 employees across Malaysia, South Korea, Indonesia, and the Philippines. Aligned with my advocacy for sustainability, a key difference is that Paywatch not only offers the lowest EWA withdrawal fees in these markets, but the service is also often offered cost-free to the companies too.

In our country, 7 out of 10 Filipinos struggle to manage their debts and they have low access to fair-priced credit. While committed to helping their employees with financial difficulties, many companies are hesitant to offer financial innovations that might resemble high-priced payday loan products. Such products are seen as contrary to promoting financial wellness and company values. 

Debt-free earned wage access offers an approach that is completely different from payday loans. Employees can access the income they have already earned, avoiding the pitfalls of costly short-term financing and potential debt traps. This reduces financial stress, leading to happier and more productive employees—a significant advantage for any business. Recognizing the benefits to their business and employees, trusted brands in the Philippines like Pick A Roo, Lay Bare, and Unido Capital (Kuya J, Popeyes, & Majestic) have partnered with Paywatch to provide their employees the benefit of on-demand pay. 

At this early stage, many more companies with employee bases in the thousands, including those in the BPO, manufacturing, and retail industries are in the pipeline, I am excited about the swell of interest in EWA, and I am hopeful this will lead to broader and mainstream adoption of earned wage access.  It is great for employees and makes absolute business sense for companies. 

With Earned Wage Access, it’s a win-win situation for both the company and employees, fostering financial well-being and workplace satisfaction. After all, everyone deserves to receive what they have already earned.