The new legislation creates a requirement that earned wage access providers operating in Missouri must register with the state
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.
By James Pothen on July 11, 2023
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