The global gig economy is expected to grow 17.4% through the end of 2023, as reported by Mastercard. Although competition is fierce, there are growth opportunities for both leading digital platforms and new entrants, especially in emerging markets. These platforms are responsible for connecting freelancers and customers and they face several challenges which are commonly linked to payments.
As follows, you will see in this article how to achieve a streamlined payout process and keep gig workers satisfied and loyal. We have brought insights from Mastercard and Visa reports, as well as key takeaways from our own experience.
Get ready for our ride!
Offering real time payments
One of the most important steps towards an efficient payout process is offering real time payments. They are key drivers for gig worker’s satisfaction, preference, and loyalty, while allowing them getting their money when they want it and how they want it.
Visa conducted a survey with 2326 gig workers from several countries in Latin America, Europe, North America, and Asia. They have found that 46% of the respondents would like to get paid faster, while 77% said that there are times when they urgently need money.
Believe it or not, but the survey has also indicated that three out of four gig workers are willing to even pay to have real time payments. Also, 9 out of 10 respondents are likely to sign up for instant payments. Finally, when asked what they would do if they were offered a real time payment option, here is what it was found:
- 62% would go to work for an alternative gig company that offers it
- 66% would choose on-demand work from this gig company instead of others
- 70% would more shifts for quick money when needed
- 72% would recommend their gig company to potential workers
When it comes to international gig employers, traditional methods like SWIFT bank transfers, should be avoided. They are slow, and often include handling charges. Instant payouts, on the other hand, saves time and tend to face less fees.
When we look at success case stories, let’s take Mastercard’s example with Uber. The global financial services company worked with the global ride hailing service in 2018 to develop Instant Pay – a feature that offers drivers the option to receive their earnings in real time. This way, drivers no longer needed to wait the traditional one week to be paid and increased their satisfaction and engagement in the ride-hailing platform.
Enabling flexible payment methods
Despite offering instant payments, it is crucial for any gig employer offering multiple global payout options (e.g., cash, int’l funds transfer) so it can attract workers with specific payment needs, claims Mastercard.
Latin America (LatAm), for example, which is a region with several emerging economies, heavily relies on alternative payment methods (APMs). Since about half of Latin Americans are unbanked, digital wallets and bank transfers gained a lot of traction in recent years. The first one currently represents 11% of the total e-commerce transactions volume in LatAm and have been growing 40% annually. Bank transfers, which includes instant payment methods such as PIX and PSE, account for 7% of the total share, but are growing at an astonishing 107% rate per year – as reported by our Beyond Borders study.
Being fully transparent
Visa’s gig work force survey found that gig workers usually sign up with 3+ platforms
but are active with fewer. Thus, in order to develop a loyal and dedicated workforce, being fully transparent about how they would get paid is highly recommended.
This level of transparency includes letting gig workers aware of when they would get paid, and avoiding delayed payments at all costs. Hidden fees upsets them so being clear about currency conversions, taxes, and local regulatory compliance is mandatory – especially for businesses that operates in different countries.
Again, another interesting insight from Visa’s survey was the low financial stability of the gig workers interviewed. Only 12% of the respondents described themselves as financially secure. Freelancers prefer an efficient payment system to avoid unpredictable or delayed payouts that jeopardize their cash flows and consequently lets them unhappy. So, especially when dealing with a large number of recipients, gig employers should go for smart management tools and automation. Thereby, it saves resources in terms of time, money, and people, while it avoids human error and ensures a smoother payroll.
Paying consistently also requires attention to taxes and regulations. Every contractor must be hired and payed in a legal way no matter where he/she is located. The more global a gig economy business is, the harder is complying to all bureaucracies. For this reason, building local connections and having a reliable local partner in each country or region is highly recommended.
Counting on anti-fraud solutions
Every funds transaction is subject to frauds. Now, can you imagine global gig platforms that deals with tens of thousands of recipients? Well, there is a lot of risk involved. According to About-Fraud – a global anti-fraud community – frauds within the gig economy universe are overlooked:
“The growing availability of gig workers makes it increasingly easy for fraudsters to avoid many common fraud detection techniques. They can easily use new IPs with good location match, have access to many new devices every day, and do not need to rely on bots or proxies that can be detected by counter-fraud technologies.”
In order to tackle all these risks, companies should invest in smart anti-fraud solutions and, in most cases, count on third party services and partners with local expertise
Having a payment provider with local expertise
As noticed, having a payment service provider (PSP) is the best way to tackle all the above mentioned pain points. It is common for global gig platforms to count on one or more PSPs with local expertise in each country or region to overcome their growth barriers. The solutions implemented can enable instant and flexible payment options with low exchange fees.
Now, if you are looking for a truly all-in-one payments platform with local expertise in emerging markets, you are in the right place. EBANX has a payout solution focused in LatAm that fits any kind of business or operational model. Global gig platforms such as Uber, Airbnb, Hotmart and Cambly are a few examples of our merchants base.
From your gig worker’s onboarding to a localized customer service, our platform covers the whole process to pay your contractors in different countries and currencies, safely and quickly. There are no hidden requirements or fees and you count on more than 100 payment options, including instant methods to leverage your contractor’s satisfaction and increase retention rates.
Are you ready to take your gig platform to the next level and get ahead of the competition?