The gig economy has grown exponentially over the past decade. With flexible work hours and independence, it is no question why freelance work is becoming more attractive to many. According to a 2017 BLS survey, 36 percent of the workforce relied on gig work for some portion of their income in the United States. This number is expected to grow to 43 percent by the end of 2020.
Technology has made it easier for workers to find gigs and employers to find workers. Technology also removed geographical barriers fueling the need for global payment solutions. Globally, the gig economy now “represents $2.7 trillion in annual disbursements”.
However, with rapid growth comes challenges for businesses looking to pay gig workers, especially when their workers are across borders. With the gig economy expected to grow by 17.4% through 2023, businesses need to adapt to meet the payment demands of gig workers to remain competitive. So how can businesses adjust their operations and strategies in order to meet these changing customer expectations?
Economic and Regulatory Considerations
Thanks to the emergence of online digital platforms, it has become easier than ever to connect workers to employers. With shifting demographics and ages of workers, industries are being forced to adapt to the changing workforce and even more so, provide cross border payments to international freelance workers. Although the North American payments industry has been traditionally slow to react to market shifts, growing demand is putting pressure on government and businesses alike to meet customer demands. Now, questions are being raised surrounding worker rights, benefits, payments and labor issues.
Some government bodies are taking note on how to best support, identify and manage gig workers, many of whom are utilizing freelance work as full-time income. Recently, states such as California, implement law AB 5 to protect workers and deliver them proper worker incentives. It is no question that this growing section of workers are gaining the attention of law makers to ensure they are fairly paid.
Aside from the impact of new industry regulations, economic instability and market uncertainty is weighing on businesses who rely on freelancers globally. 85 percent of gig employees, whose primary source of income is gig work, worry about the impact of an economic recession. Thus, the need for gig companies to look at a seamless payment experience for gig workers.
Gig workers want to be paid immediately after they complete their gigs. More and more we are seeing freelance workers demanding immediate access to their financial information in addition to on-time payments. So how can businesses meet the demands of their global independent workforce? Partnering with payment providers who understand the needs of gig companies and gig workers and can offer customized methods of payment based on the regional preference of the gig worker is a must.
For example, unbanked gig workers prefer e-wallets and card payouts. Amazon sellers prefer account numbers and IBANs in their names to receive payouts in various currencies. Vacation property owners prefer payment by wires. Some temporary works prefer cash in some parts of the world. Others prefer to receive payment by bitcoin or Ethereum. Having key payment partners who can offer businesses the ability to pay their independent workforce in their preferred method and on-demand will ensure businesses stay ahead of the curve in a very competitive gig economy.
Finding the right payments partner can feel like a monumental task where there’s always a catch. Choosing the right partners will also help ensure your gig workers remain loyal to your platform and are ultimately satisfied with your service offerings.
Global payment processing can reduce profit margins if businesses don’t do their due diligence when selecting a payments partner that best suits their needs. Large banks such as Chase and JP Morgan are built on top of legacy platforms, which themselves were built on legacy platform and can hold payment restrictions. The systems can’t talk to each other. Banks don’t have the technology to service. Therefore, it’s crucial for large FIs to partner, fund, and acquire Fintech companies built on technology from the ground up to service customers.
Companies such as Upwork, Lyft or AirBNB that primarily rely on gig workers to keep their businesses growing might be best served by working with a payments partners that make sense from a business operational standpoint. Top things to consider in finding the right partner include the types of services offered such as their expertise in addressing challenges of meeting local payment dynamics, payout options and currencies, global access, compliance, licensing, convenience, and most importantly customer service.
Each organization has different needs and desires. In the end it’s simple, gig workers want control over how, when and where they get paid. Gig companies need to realize that the right payments provider will need to understand these key considerations and pain points for workers in order to meet the demands of this growing industry. More and more businesses need to ensure their customers are satisfied and they are staying relevant among growing industry competition by providing gig workers what they need – efficient and accurate payments.
About Bob Dowd
Bob Dowd is the CEO of moneycorp North America and is a 35+ year veteran of the foreign exchange and payments industry as well as a certified treasury professional (CTP). His extensive industry experience includes 25 years with Travelex Global Business Payments, where he was a member of the North American Executive Board, 6 years with Cambridge Global Payments where he was Managing Director and 3 years with Currency Exchange International and its wholly-owned Canadian subsidiary Exchange Bank of Canada as Senior Vice President, North America.
Bob joined moneycorp in April 2019 where he oversees the overall business in the United States. His focus is on the development of strategic plans, business development, marketing, platform and application innovation, providing clients and its partners integrated, foreign exchange services for both the US while exploring opportunities for expansion in the Canadian market.