HMN 2026: How On-demand pay access spurs savings for low-wage workers

Research recently published in the journal Information Systems Research finds that giving low-wage workers access to their earned wages before payday can significantly increase saving behavior, financial monitoring and long-term planning. The study found that On-demand Wage Access (OWA), a fast-growing fintech service, raises monthly saving frequency by 3.7%, dashboard monitoring by 12.9% and financial goal-setting by 1.3%. By not waiting until a specific payday, employees are more likely to save and actively engage in responsible personal financial management.

The study, titled “Working Daily, Paid Monthly? Effects of On-Demand Wage Access on the Financial Engagement of Low-Wage Workers,” was authored by Jihye Kim and Seokchae Yoon of the Korea Advanced Institute of Science and Technology (KAIST), Sunghun Chung of George Washington University, and Wonseok Oh of KAIST.

Low-wage workers across the U.S. routinely struggle with liquidity restrictions on their earned wages. If they don’t have enough credit, or if their wages struggle to keep up with expenses, workers face mounting pressure the longer time passes between paydays.

Even those with healthier bank accounts often face delays in accessing earned income, leading many to rely on costly payday loans or short-term credit to cover urgent needs.

OWA platforms, which are used by employers such as Walmart, Uber and DoorDash, allow employees to withdraw earned wages in real time. Yet until now, little was known about how this flexibility affects long-term financial behavior.

“On-demand wage access changes the psychological and financial landscape for low-wage workers,” said Kim. “By giving individuals autonomy over when they access income, OWA creates conditions for more deliberate financial management, including heightened saving, more frequent monitoring of account dashboards and concrete goal-setting.”

To examine these effects, the researchers partnered with a major U.S.-based OWA platform and analyzed transaction-level data from roughly 4,000 low-wage workers between May 2021 and January 2022. The observational analysis was complemented by quasi-experimental analyses, qualitative interviews, surveys and an online experiment, allowing the researchers to link system design choices to observed behavioral outcomes.

“Workers told us that OWA helped them feel more in control of their financial lives,” said Yoon. “Rather than waiting for fixed pay cycles or turning to high-cost lenders, they could make timely decisions that supported long-term stability.”

However, the study also found that outcomes vary depending on how individuals use OWA. Users who frequently paid elective fees for instant withdrawals, rather than using fee-free options, were less likely to increase saving, dashboard monitoring or goal creation. These “immediacy-seeking” usage patterns diminished many of the benefits OWA otherwise provides.

“Our analysis showed a clear divergence: When workers use OWA strategically, it builds financial discipline, but when they rely on instant withdrawals out of habit, it weakens that discipline,” Chung noted. “Designing OWA systems that minimize unnecessary fees could further enhance positive outcomes.”

The researchers also identified important environmental factors. OWA’s benefits were amplified among workers in areas with low minimum wages or limited bank branch access, regions where financial constraints are more severe and where traditional financial institutions play a smaller role.

“In marginalized settings, on-demand wage access can serve as a critical tool for financial inclusion,” Oh said. “Our findings show that thoughtful design and policy support can help ensure these services truly empower underserved populations.”

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