Given the recent gig economy bill passed in California that promises to transform how the state classifies independent workers, now, more than ever, increased focus is being placed on the experience of gig workers and freelancers.
This legislation could mark a new paradigm for the global gig economy, but it also presents a perfect storm of opportunity for payments providers to foster a better experience for independent workers by providing instant payout solutions to companies operating within the gig economy ecosystem.
In the current regulatory environment, companies operating within the gig economy must start to shift the scales in favor of independent contractors. One way to prioritize gig workers and freelancers’ experience is by tapping into technological advancements to offer instant payouts to workers.
To thrive in this fast-moving ecosystem, facilitating payments for gig workers and freelancers must be as seamless as ordering an Uber — that is, in the age of the consumer, services, including financial services, must be transparent, seamless, convenient and, above all, immediate.
The evolution of side gigs and payouts
Despite an increased familiarity of the gig economy today, in the early days of the dot-com boom, freelancers and gig workers as we conceptualize them today were not very common.
People occasionally had jobs on the side of their full-time employment but this was primarily seasonal work to make ends meet with a supplemental paycheck once or twice a month.
As technology improved, the global pool of freelancers, particularly in Asia-Pacific and Latin America, grew, but the payment systems lagged far behind. The digital infrastructure necessary to support online, real-time payment processing tools did not yet exist.
Yet, freelancers demanded faster payments and companies, accustomed to saving money by outsourcing their labor forces, similarly demanded lower costs from their payment processors. This saw many companies make the switch to prepaid cards in late 90s and early 2000s, cutting the cost of wire transfer fees but passing the burden of costs onto the recipients, the freelancers.
Money Transfer Operators (MTOs) enabled remittances with direct deposit into recipients’ bank accounts as well as cash pickup. However, these payments were still slow and cumbersome, not to mention they required organizations to perform costly and time-consuming integrations with multiple MTOs and payout partners, each with different reporting systems.
Today’s digital world demands a payments solution that fits with modern commerce needs. A major challenge that gig economy marketplaces like HomeAway and freelancer networks such as Upwork face is being able to instantly pay freelancers, sellers and gig workers in their local currencies.
How do you expedite payments on a global setting?
While it is difficult to estimate the size of the global gig economy and freelancer workforce, one estimate places it at around 84 million, or less than three percent of the global labor force of 3.5 billion. A report from MasterCard claims the global Gig Economy currently generates $204B in gross volume.
If the gig economy is to continue to grow, the way money is moved must keep up with the pace set by technological advances in other aspects of people’s lives.
The appetite for digital, on-demand payment solutions has never been stronger. Consumers have become accustomed to on-demand transactions in other aspects of their lives, such as paying for goods, services, and experiences with the touch of a finger.
As a result, expectations are rising for immediate payments in all aspects of money movement around the world, including more streamlined and efficient payments to freelance and contract workers.
The global money transfer sector has shifted from traditional brick-and-mortar model — where people physically went to places to send and receive cash — towards more digital money transfers and payments, using mobile devices and smartphones.
Platforms like ZED Network offer a single integrated payments portal through which its partners can access multiple payment options in multiple currencies across multiple markets. With one single integration, companies can simultaneously access a number of payout partners worldwide to pay thousands of freelancers in a number of ways.
For example, a local developer, copywriter or graphic designer in Vietnam, Mexico or Kenya engaged by an organization based in the U.S. or Canada could be paid for his or her work instantly in cash, bank deposit or their favorite digital wallet.
The way forward
Despite the promise of more legislation around the gig economy, the global appetite for freelance and contract work does not look to be subsiding any time soon. The gig economy must continue to evolve to improve upon the experience of independent workers.
Payments companies are faced with both a challenge and an opportunity, if successful, to capitalize on the need for real-time payments that are in line with consumers’ expectations. Leveraging technological advances in the payments industry, such as blockchain, can solve payments for independent contractors.
Gone are the days when freelancers would wait for two-week pay cycles to receive the funds for their work; faster payments are becoming the norm in this new workforce dynamic. Innovative solutions that are cost-effective and integrated could be a game-changer for businesses and independent workers alike, with the potential to streamline the global gig economy like never before.