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What Is On-Demand Pay?

Eric Rosenberg • January 18, 2024

On-demand pay is a financial tool that allows you to access part of your paycheck before payday. For example, if the rent is due tomorrow and payday isn’t for a few more days, you can use on-demand pay to access funds without going into debt.

Here’s a closer look at how on-demand pay works, the pros and cons of on-demand pay, and what you need to know if you’re considering using on-demand pay in your finances.

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How does on-demand pay work?

On-demand pay, or earned wage access (EWA), is a modern twist to your traditional payday. It lets you access some of your earned wages before your scheduled payday. This means you can get some of the money you’ve already worked for any time you need it without waiting for your official payday.

Here’s how it works: A third-party service syncs with your employer’s payroll. As you work, your earnings are tracked and made ready for you to withdraw. This is done through apps or platforms that let you access some of your day’s wages right after your shift, even if payday is still days or weeks away.

When you request an advance through the on-demand pay service, the amount you ask for is sent to your account, usually within minutes.

Don’t worry: on-demand pay is not a loan. There’s no interest or payback involved. It’s simply an advance on your next paycheck. For instance, if you access 25% of your upcoming paycheck, the remaining 75% will be paid on your regular payday. It’s a straightforward, interest-free way to help you get through a cash crunch.


Deposit checks from anywhere* and get paid up to two days early with direct deposit† – just use the Chime online banking app.

The benefits of on-demand pay

On-demand pay offers a wealth of benefits. This innovative approach to accessing earned wages before the traditional payday provides financial freedom and stability, changing how employees manage their finances. Here are the key advantages of on-demand pay.

Benefits for employees

  • Immediate access to earned wages: On-demand pay allows you to access the money you’ve earned immediately rather than waiting until payday. This flexibility can be a game-changer in managing your finances.
  • Reduced need for loans or credit: With the ability to access wages as they’re earned, you’re less likely to rely on credit cards or payday loans for unexpected expenses, reducing your overall financial burden and the risk of falling into debt.
  • Improved financial management: This system provides a more fluid way of managing your finances, allowing you to align your income with your expenses better. It can help in budgeting and reduce the stress of living paycheck to paycheck.
  • Reduced late fees and financial stress: Having timely access to your wages means avoiding late fees on bills and other financial commitments. This saves money and reduces anxiety related to financial obligations.
  • Feel supported by your employer: Knowing that your employer provides a system that supports your financial well-being can increase your satisfaction and loyalty towards your job. It shows that your employer values and respects your financial health.

Benefits for employers

  • Shows investment in employees: Offering on-demand pay demonstrates a company’s commitment to its workforce, underscoring that the employer values its employees’ financial well-being and satisfaction.
  • Competitive benefit: Incorporating on-demand pay into the benefits package makes a company more attractive to potential hires, giving it an edge in today’s competitive job market.
  • Boost productivity: Employees with less financial stress are more focused and efficient, leading to increased productivity in the workplace.¹
  • Reduced turnover and better retention: Providing on-demand pay enhances employee loyalty and job satisfaction, significantly reducing turnover rates and fostering long-term employee retention.2

Essentially, on-demand pay empowers you with greater control over your earnings, transforming how you navigate your financial landscape. It’s more than just an employee benefit. It’s a tool that brings peace of mind, stability, and empowerment to team members’ financial lives.

The drawbacks of on-demand pay

While on-demand pay ( or earned wage access/ EWA) offers many advantages, be aware of potential drawbacks. Understanding these challenges can help you make informed decisions about using this financial tool. Here are some of the issues to consider:

  • Transaction fees: Some on-demand pay services might charge fees for accessing your wages early. These fees can add up over time and reduce the total amount you take home.
  • Financial stability: Frequent access to wages might lead to budgeting challenges, as it can disrupt the regularity of a traditional payday and potentially make it harder to manage long-term financial planning.
  • Constructive receipt: This refers to tax implications. When wages are made available but have yet to be received, it could complicate tax situations, affecting how and when your income is reported and taxed.

Examples of on-demand pay

Here’s a fictional example of how someone named Emily might use on-demand pay to improve their financial situation. Emily’s story is an excellent example of how on-demand pay can work in real-life situations.

Emily is a graphic designer in a tight spot. Her rent is due Wednesday, but her paycheck is scheduled for Friday. The stress of potentially incurring late fees or facing eviction is a constant worry. This time, however, she decides to use her company’s new on-demand pay service.

By requesting a portion of her earned wages through the service, Emily can access the funds she needs almost instantly. This allows her to pay her rent on time, avoiding a financial strain.

This example illustrates the relief and control on-demand pay can offer, especially in preventing financial penalties like late fees or overdraft charges. That’s a big win for Emily’s finances, saving her fees and financial stress with a few taps using the on-demand pay app on her phone.

On-demand pay can smooth out your finances

On-demand pay can smooth out your finances by providing timely access to earned wages. This immediate access helps you manage unexpected expenses and reduce your reliance on high-interest loans or credit cards.

With Chime, you can access your paycheck up to two days early. Find out more about how we get you paid early.

Better online banking

  • Checking Account with no monthly fees
  • 50,000+ fee-free ATMs~
  • Chime Visa® Debit Card
Get Started

Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

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Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. and Stride Bank, N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

* Mobile Check Deposit eligibility is determined by Chime in its sole discretion and may be granted based on various factors including, but not limited to, a member's direct deposit enrollment status.

† Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.*

1 Information from PwC's Employee Financial Wellness Survey as of January 11, 2024:

2 Information from ADP's Earned Wage Access 101 as of January 11, 2024:

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