House committee hears competing views on regulating earned-wage access; bill held for amendments

The House Financial Institutions Committee heard more than two hours of testimony on House Bill 1125, a proposal to license and regulate earned-wage access (EWA) services that let workers access wages they have already earned before a scheduled payday.

Chairman Teschka introduced the bill as a narrowly tailored licensing framework that would require EWA providers to offer at least one no-cost option, bar credit checks and credit reporting, ban interest and late fees, and give the Department of Financial Institutions (DFI) supervisory authority over providers. "This bill really just creates the licensing structure for those EWA providers," Teschka said, adding that the bill includes transparency requirements and a free option for consumers.

Proponents: Representatives of major EWA providers and fintech trade groups testified in support. Ben LaRocco, senior director of government relations for EarnIn, said EarnIn has served more than 100,000 Indiana residents and that many users access the service for modest amounts and low fees. Andrew Welch of DailyPay, which integrates with employers' payroll systems, said the product allows workers to access wages they have already earned and that one-third of DailyPay users never access funds early but use the app for wage tracking and financial tools. Trade associations — the American Fintech Council, Financial Technology Association and Chamber of Progress — said the bill provides legal clarity and enshrines consumer protections such as mandatory free-transfer options and nonrecourse treatment of advances.

Concerns from consumer advocates: Erin Macy, director of the Indiana Community Action Poverty Institute and co-chair of Hoosiers for Responsible Lending, spoke in neutral with a list of recommended changes. Macy urged the panel to add a limit on overall charges, APR disclosure, a minimum reasonable repayment term, a cap on ACH debit attempts to avoid cascading NSF/overdraft fees, public reporting and stronger requirements that the director may not waive. "Because we're classifying earned wage access products as outside of the scope of Indiana's lending laws, they are not subject to rate caps, fee limits, or our criminal loan sharking statute," Macy said, citing studies that found very high APR-equivalents for some EWA offerings in other states and emphasizing repeat borrowing patterns in the market.

Technical safeguards and data: John Barnes of Catalyst and other witnesses asked the committee to consider a centralized verification system or shared database so providers — whether direct-to-consumer apps or employer-integrated systems — can see in real time whether a worker has outstanding advances across platforms. Barnes said such a database would reduce the risk of multiple providers overextending the same borrower.

Committee discussion and disposition: Committee members asked about reborrowing, APR disclosure, default rates and the voluntary-tip model some providers use. Supporters said many providers offer free ACH transfers and make money on optional instant-transfer fees or voluntary tips; providers said average fees for instant transfers are typically $2.99–$5.99 and that a significant share of customers use the no-cost option. Consumer advocates pushed for APR disclosure and statutory caps and asked the director's authority to be limited.

Outcome: Chairman Teschka said the committee would hold HB 1125 for amendment and further negotiation and invited members to submit concerns for the coming week. No committee vote was recorded on the bill during the hearing.