Over the years, consumers have become accustomed to getting what they want when they want it, usually by doing no more than clicking a few buttons. They can watch new shows by the season, get same day shipping from marketplaces like Amazon, and order groceries online for immediate delivery. 

So it makes sense that this desire for immediacy extends past commodities. Employers are beginning to implement a system referred to as on-demand pay, which is exactly as it sounds: pay day, any day. On-demand pay gives employees access to wages as they are earned.

The Consumer Financial Protection Bureau (CFPB) recently released an advisory opinion titled “Truth in Lending (Regulation Z); Earned Wage Access Programs,” which explains the nuances of earned wage access (EWA) and the complications of regulatory uncertainty.

To help simplify the document and discuss on-demand pay and early access to wages, PaymentsJournal sat down with Jason Lee, CEO of DailyPay.  

PaymentsJournalOn-Demand Pay: What Does the CFPB Have to Say About It?PaymentsJournal On-Demand Pay: What Does the CFPB Have to Say About It?PaymentsJournaljQuery(document).ready(function ($){var settings_ap54871086 = { design_skin: "skin-wave" ,autoplay: "off",disable_volume:"default" ,loop:"off" ,cue: "on" ,embedded: "off" ,preload_method:"metadata" ,design_animateplaypause:"off" ,skinwave_dynamicwaves:"off" ,skinwave_enableSpectrum:"off" ,skinwave_enableReflect:"on",settings_backup_type:"full",playfrom:"default",soundcloud_apikey:"" ,skinwave_comments_enable:"off",settings_php_handler:window.ajaxurl,skinwave_wave_mode:"canvas",pcm_data_try_to_generate: "on","pcm_notice": "off","notice_no_media": "on",design_color_bg: "111111",design_color_highlight: "ef6b13",skinwave_wave_mode_canvas_waves_number: "3",skinwave_wave_mode_canvas_waves_padding: "1",skinwave_wave_mode_canvas_reflection_size: "0.25",skinwave_comments_playerid:"54871086",php_retriever:"https://www.paymentsjournal.com/wp-content/plugins/dzs-zoomsounds/soundcloudretriever.php" }; try{ dzsap_init(".ap_idx_149987_20",settings_ap54871086); }catch(err){ console.warn("cannot init player", err); } });

The CFPB is defining boundaries

We know what on-demand pay is, but how do employees access it? 

Well, it is typically done through a third-party provider, such as DailyPay. This third-party is the one distributing net pay, so the employer doesn’t have to go through the process of running the actual payroll. “That’s really the value that [DailyPay is] adding,” remarked Lee.

But when money goes out, that money must be returned. There are two models that highlight how this return happens:

* The employee doesn’t pay anything back, and a settlement happens behind-the-scenes with the use of advanced technology. This is the preferred method of DailyPay.* Repayment from the employee. This is like a direct payback through an employee-authorized  payroll deduction or withholding. 

So what’s the CFPB got to do with this? “The CFPB opinion really clarified that that second set of models—or that second set of earned wage access, if structured in accordance with a number of different provisions, including no fees associated with it—[is] not a lending transaction,” said Lee.

The analysis from the CFPB determined that if the employee is repaying the vendor from which they are receiving the funds,