Dive Brief:
- Republican Indiana Gov. Mike Braun signed early wage access legislation into law Tuesday, according to the Indiana General Assembly’s website.
- Under the Indiana Earned Wage Access Act, EWA providers will be required to obtain a license to operate in the state, renew the license annually and clearly disclose that tips are voluntary.
- The law also requires EWA providers to offer and prominently display at least one service at no cost to customers, according to the text of the law. The state’s department of financial institutions was given authority to implement and enforce the law.
Dive Insight:
Indiana joins a growing list of states that have passed laws in recent years to oversee earned wage access, also known as on-demand pay. Among other states that have enacted similar laws are Utah, Arkansas, South Carolina, Kansas, Wisconsin, Nevada and Missouri.
Initially, the cost of applying for the license, or renewing it, will be $1,500, but the law gives the department the leeway to increase that to $2,500. The law also gives the department the option to conduct examinations and investigations of the EWA providers.
In what appears to be an effort to safeguard consumers from mounting debt, Indiana’s new law prohibits EWA companies from accepting outstanding fees, voluntary tips or other donations via credit cards.
Fintech companies in the mushrooming industry include DailyPay, Payactiv, EarnIn, Gusto and Rain Technologies, all of which have varying business models.
The American Fintech Council contended in a press release Wednesday that the law "provides a clear and consumer-focused regulatory framework for EWA services in the state."
However, some consumer advocacy organizations, including the National Consumer Law Center, have opposed states' licensing laws, arguing they don't provide enough protections for workers, including against excessive fees.
New York City-based DailyPay, a member of the council, praised the new law as a “regulatory achievement” in a Tuesday press release. The company noted that it plans to continue working with state and federal policymakers to make sure that its services and benefits are fully understood.
“We applaud Indiana legislators for responding to the realities facing working people in the state and ensuring continued access to a crucial financial option with common-sense guardrails that allow consumers and businesses to benefit,” Ryan Naples, DailyPay’s vice president of public policy, said in a statement. The company thanked Braun as well as state legislators who pushed for the bill, including Indiana Republicans Rep. Jake Teshka and Sen. Kyle Walker.
Last year, DailyPay donated $6,970.45 to Republican legislators in the state, including Braun ($2,500) and bill co-sponsors Walker ($500), Sen. Scott Baldwin ($750) and Rep. Matt Lehman ($500), campaign finance records show.
