The gig economy, contingent workers, 1099 workers, the sharing economy, the side hustle, whatever it may be called, has been a difficult market to measure in terms of people involved and money transacted. What is clear, according to data released by JP Morgan Chase, is that the market is certainly growing:
The number and percentage of gig economy jobs is increasing, according to JPMorgan Chase, which examined transactions between Chase accounts and 128 gig economy platforms. But the growth hasn’t been even and depends on the relationship between the sharing app and its contractors, which will change as the apps diversify. The bank found people who use apps to lease their assets, such as a an apartment or parking space, have seen a 69 percent increase in income over the past four years, while people in “driving” gig jobs saw their monthly wages decrease 53 percent over the same period.
As the market for short-term talent increases while at the same time the number of unemployed workers in the U.S. is at all-time lows, competition between the app providers, the marketplaces and other intermediaries is heating up. This means that to attract new workers, worker benefits will need to be extended. One that has appeal is the ability to get paid in real time:
The different layers of income create new gig economy payment challenges for an industry that is already scrambling to accommodate payouts that don’t fit a predictable biweekly, or even a traditional freelance contract structure.
Real-time processing, or faster payments, is one option to handle variable payment cycles. It’s to be a factor as the “side hustle” aspect of gig work starts to develop a second wave.
In addition to paying workers in real time for the work they have done, they also need to have an expense mechanism when they are spending money on behalf of the person doing the hiring. Real-time payments with payment certainty can help here too:
The additions to ride or home sharing, such as on-demand waiter or maintenance staff, or food delivery, cause some expense, creating a supply chain challenge—in addition to the salary payouts, according to Peggy O’Leary, director of sales and client services for the prepaid unit at CPI Card Group.
As food delivery and now on-demand staffing add to ride sharing, Uber, TaskRabbit, GrubHub and similar companies will face pressure to move funds to more recipients at a faster pace.
“That’s especially true for any service that involves product delivery or errands — part of the pressure will be to fund the expense needed to purchase goods without having to float money,” O’Leary said. “Companies will need a structure similar to a fleet cards.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
