SC: Testimony in Support of South Carolina S 700

TO: South Carolina House Committee on Labor, Commerce, and Industry Subcommittee on Business and Commerce

FROM: Elizabeth Gorz, Chief Strategy Officer and Head of Legislative Affairs, American Fintech Council (AFC)

DATE: April 17, 2024

SUBJECT: Senate Bill 700

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Position: Support.

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Testimony:

Thank you Chairman Sandifer III, Vice-Chair Taliaferro West IV, and members of the Subcommittee on Business and Commerce for providing me the opportunity to testify before you in support of Senate Bill 700 (S. 700), establishing the South Carolina Earned Wage Access Services Act.

Our mission at AFC is to promote an innovative, transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial technology (Fintech) and encouraging sound public policy. AFC represents the largest and the most providers of Earned Wage Access (EWA) products and services. As such, we have a responsibility to the industry, but even more importantly, to the South Carolinian consumers they serve. AFC has developed comprehensive standards for what constitutes best practice for responsible EWA service provider, which our members adhere to in their offerings both nationally and in South Carolina.

The standards set by AFC include the requirement of a voluntary no-cost, free option be made available to all users; strong fee disclosures represented in a clear and transparent manner; and the ability for users to cancel the EWA service at any time. The provisions of SB 700 closely reflect the standards we established for responsible EWA services. Therefore, we support this legislation and ask your committee to do the same.

We believe that the bill, as written, properly balance responsible innovation with a pragmatic, consumer protected regulatory framework that fits the EWA industry. This new legislation establishes clear standards for acceptable EWA services regulated under its registration regime in a manner that reflects the nuances and optionality of the EWA industry while also protecting consumers from irresponsible actors.

Establishing the regulatory framework enumerated in S. 700 will allow EWA services to flourish in South Carolina and help workers access the wages they need on their own timeline. AFC has publicly advocated for a clear and consistent regulatory framework for EWA that avoids duplicative or diverging requirements and accurately reflects the nuances of the financial service.³ Passing S. 700 would ensure that this regulatory aim is met in South Carolina and directly benefit consumers by giving EWA providers a clear and functional regulatory path to offer their services most effectively.

In closing, estimates of the EWA market size suggests that in the EWA industry is currently serving over 100 thousand South Carolina workers and millions of nationwide.¹ I applaud the South Carolina legislature for taking up this issue in a timely manner and seeking a pragmatic solution through S. 700. I thank you again for the opportunity to offer my support for this bill. I appreciate your consideration of this bill and am happy to answer any questions you may have.

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¹ South Carolina EWA figures based on data provided by AFC members. For national market, see Yahoo Finance, “The Popularity Of Earned Wage Access Programs Is Rising; This EWA Provider Is Raising $5 Million To Capitalize Through Expansion Into New Markets”, (Jun. 14, 2023), available at https://finance.yahoo.com/news/popularity-earned-wage-access-programs-130000943.html#:~:text=Increasing%20Trend%20Toward%20EWA%20Services&text=The%20fintech%20market%20was%20worth,19.5%25%20during%20the%20forecast%20period