CT: Testimony in Support of EWA

TO: Connecticut Black & Puerto Rican Caucus
FROM: Phil Goldfeder, CEO, American Fintech Council (AFC)
DATE: February 26, 2025
SUBJECT: Responsible Innovation in Financial Services, Earned Wage Access

Testimony:

Thank you Chair Felipe, Vice-Chair Wilson, and members of the Connecticut Black and Puerto Rican Caucus for having me this evening to discuss the importance of responsible innovation in financial services and specifically the benefits of Earned Wage Access. My name is Phil Goldfeder, I used to serve in the New York State Assembly, and I continue my public service today as CEO of the American Fintech Council (AFC).

AFC is the premier trade association representing the largest financial technology (Fintech) companies, including the biggest providers and largest number of Earned Wage Access (EWA) companies. Our mission is to promote a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. Over the last few years, responsible innovators in financial services have been able to create access to safe, responsible and affordable financial services for families long forgotten by traditional finance, particularly those in minority and rural communities across the country.

Although Connecticut families have historically had access to and benefitted from using EWA, unfortunately, due to a misinterpretation of this unique product by the Connecticut Department of Banking, EWA providers can no longer offer their services in Connecticut. We urge the legislature to establish a regulatory framework for companies to safely and responsibly offer EWA in Connecticut. EWA is an innovative financial tool that empowers workers to access their wages in a way that best fits their lifestyle rather than keeping them tethered to arbitrary payroll cycles. Users can opt to access EWA through their employers, as stand-alone products, or as part of a subscription.

EWA is not a loan and should not be regulated as such. As a distinct financial product, EWA must be governed by distinct regulations. To ensure that EWA providers safely and effectively serve consumers, AFC has established clear standards on what constitutes responsible EWA. Our standards require

• A voluntary no-cost option be made available for all users;

• Strong fee disclosures represented in a clear and transparent manner;

• No underwriting or credit checks and

• Ability for users to cancel the EWA service at any time, meaning it does not have to be repaid.

I ask that you draft and support a bill to reflect these standards. This will empower your constituents to once again have a vital service to help make ends meet.

Thank you again for considering this issue in a timely manner and seeking a pragmatic solution to regulation.

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