Paying workers in the contingent workforce or gig economy has gotten a lot of attention of late. There have been solutions in the market place to pay freelance workers, workers who are paid by the job or for content, or in the sharing economy (i.e., Airbnb) for years, but given the continued growth of individuals with a side hustle or those with non-traditional work arrangements, it is attracting more capital as it proves to be a stable market. In recent months, both Mastercard and Visa have made some investments in this area. More on Visa’s activities here, and Mastercard’s announcement from just last week is here.
PaymentsSource had this to say about the recent interest in this part of the payments industry:
Fintech startups have been a natural fit for the gig economy, leading Visa and Mastercard to seek them out as partners to maintain relevance.
Mastercard, for example has just signed a partnership with Evolve Bank & Trust to use Mastercard Send for interest-free pay advances to hourly and gig workers. The move is an attempt to compete with payday advances as well as serve the disparate payroll needs of contractors.
The card brand cited internal research that found U.S. gig workers received $236 billion through pay advances in 2018, as well as research from McKinsey that found 27% of workers in the U.S. are now engaged in an independent or alternative work arrangement as their primary job.
“The segment is growing and all signs show it’s going to continue to grow,” said Jess Turner, executive vice president of product and innovation in North America for Mastercard. “Just a few years ago, the opportunity to be a mini-entrepreneur didn’t exist.”
Beyond payday lenders, the gig economy has attracted the actual employers — Lyft, for example, offers Express Pay — contending mainstream payment services do not meet the diverse financing needs of its contract workers.
Fintechs are also actively attracting investment. Flourish, a new VC, focuses on the gig economy. And Radical Ventures just poured new investment into Sensibill, a gig economy payment company. Another startup is Extend, which provides travel and entertainment payment services for companies that use contract workers and freelancers.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
