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As California mulls rules for payday loan alternative, rifts emerge

Tuesday, June 25, 2019
Kevin Wack | American Banker

Startups that provide early access to workers’ earned wages are jostling over key aspects of pending California legislation that would create the nation’s first-ever regulatory framework for the nascent industry.

The state Senate passed a bill 35-0 last month, but interviews with executives in the fast-growing sector revealed big disagreements about the legislation. Those disputes reflect key differences in their firms’ business models.

The proposed rules stand to help the companies, broadly speaking, by making clear that their products are not loans. The firms charge fees for access to income that workers have already earned, but have not yet received due to time lags in the payroll cycle.