How does EarnedCard do it for free?
Updated: Jun 26, 2020
It's all about the interchange.
There are a variety of solutions that have been applied to the early wage access (EWA) problem that utilize a debit card. This is a good start and some are able to offer the service at no cost. EarnedCard improves the solution by replacing the debit card, which generates about 1% in interchange, with a credit card that generates a higher interchange. This extra income allows EarnedCard to offer cash back and promote savings.
Side note: "interchange" is the transaction fee that the merchant must pay whenever a customer uses a credit or debit card to make a purchase from their store. The fee is paid to the customer's card-issuing bank. Interchange fees have a lot of variables, including type of card, size of merchant and type of merchant. Here are MasterCard's current rates.
While EarnedCard utilizes a credit card to increase interchange, it operates without interest or late fees. Employees can’t get into credit card debit because the amount they can charge on the card is tied to their EWA. EarnedCard has developed a system that allows us to provide our services free to employees and employers, and promote savings to the employees, while using a business model that is financially self sustaining.