How Does Earned Wage Access Work in Canada?

Earned wage access (EWA) lets you get part of your paycheque before your official payday.

Instead of waiting for your employer’s regular payroll cycle, you can tap into wages you’ve already earned to cover bills, groceries, or emergencies.

You’re not getting “extra” money—you’re just getting your own pay earlier, then your next paycheque is reduced by the amount you took in advance (plus any fee).

KOHO Cash Advance

Traditional earned wage access is usually set up through your employer.

With KOHO Cash Advance, you can:

• Get an interest-free cash advance up to $250

• Pay no interest—just a small monthly subscription fee

• Access money instantly in app when an unexpected bill hits

• Have repayment handled automatically when you add money or get paid

• Get extras like a free credit report, financial coaching, and priority support as part of the bundle

How Earned Wage Access Works

While the exact setup depends on the provider, EWA generally works like this:

• Your employer partners with an EWA provider.

• The service connects to payroll and tracks how much you’ve earned in the current pay period.

• You can withdraw a portion of those earned wages before payday, usually via app.

• On payday, the amount you took early is deducted automatically from your paycheque.

People use it to cover unexpected expenses or cash gaps without resorting to high-interest payday loans.

How Earned Wage Access Typically Works

In Canada, EWA usually works in one of two ways:

1. Through your employer or payroll provider

   • Your employer partners with an EWA service

   • You can see how much you’ve earned so far in the pay period

   • You withdraw a portion early, and it’s deducted automatically from your next paycheque

2. Through a third-party app or financial service

   • You connect your bank/payroll info

   • The provider estimates your earnings based on deposits and patterns

   • They send you an advance and recover it on your next pay or account load

In both cases, the advance is usually capped (you can’t access 100% of your pay), and there may be fees or subscriptions instead of traditional interest.

Is Earned Wage Access the Same as a Payday Loan?

Not exactly—but they’re both short-term tools, so it’s good to compare:

Earned Wage Access:

• Advances are usually limited to part of your earned pay

• Often structured as a flat fee or subscription instead of high interest

• Meant to help you bridge small, short gaps in cash flow

Payday Loans:

• Can involve very high effective interest rates

• Often larger than a small advance and not strictly tied to “already earned” wages

• Easy to get stuck in a repeat borrowing cycle

EWA is generally designed to be less harmful than payday loans, but it can still become a habit if you rely on it every paycheque.

Pros and Cons of Earned Wage Access

Potential Benefits

• Helps you avoid overdraft fees or late bill charges

• Can keep you from turning to high-interest payday loans

• Gives more flexibility and control over timing of your own pay

Potential Downsides

• Fees (even small ones) add up if you use it every pay period

• Your next paycheque is smaller, which can make the next month tighter

• It can hide deeper problems, like under-earning or overspending, if you rely on it constantly

The healthiest use is occasional, for genuine timing issues.