In-demand gig workers deserve on-demand payments
- Gig economy workers are reshaping when and where work is done, while boosting business growth and revenue in a time of vast global change.
- Transitioning to efficient, real-time payments helps businesses, platforms, and marketplaces maintain and grow their gig workforce talent.
From drivers, to couriers, through to independent business consultants and advisors, a great worldwide shift to remote working and digital transformation has driven demand for flexible labor. But businesses face growing competition to secure the services and skills of the most sought-after gig economy workers. The most in-demand workers want to be paid on-demand.
Friction in payments compels gig workers to switch their loyalty
One of the most common reasons independent workers switch their employers is the burden caused by the unpredictability of payments. This unpredictability is due to:
- Lack of alternate payment methods. Unlike in-person transactions that can be settled using cash or scanning a QR code, cross-border gig economy transactions are complex and settled through bank transfers, fintechs, international payment processors, and remittance companies. In developing countries, the working population with a bank account is lower than developed economies. Only 37 percent of people in Mexico have access to bank accounts compared to 98.9 percent in the UK or 98.8 percent in Germany, so the need for alternate payment methods is extremely significant for these transactions.
- Excessive payment charges. The added burden of transaction fees, currency conversions, and transaction commissions eats into the already low wages for gig workers. On average, gig workers earn about 58 percent less than full-time employee, forcing them to take loans to meet financial commitments. An International Labour Organization (ILO) survey suggests that 29 percent of gig workers providing driving and delivery services took a loan from their friends, family, or neighbors; 13 percent from a bank; and 4 percent from their employers.
- Untimely and delayed payments. Businesses with bi-process payment model (business-to-consumer and consumer-to-business) face complexities related to foreign exchange, ACH transfers, and banking regulations -- increasing the time lag between when the gig workers complete their work and when they receive payments. This makes it difficult for gig workers to timely fulfill their recurring financial obligations. The same ILO survey showed 79 percent of workers had to reduce expenditure; 65 percent had to use their savings to timely meet expenses; and 48 percent had deferred payment of bills.
Adopt real-time payments to attract gig economy talent
Businesses, platforms, and marketplaces must replace their complex, costly, and slow payment processing methods with real-time payments to ensure immediate transfer and settlement. In fact, gig workers prefer using real-time payment methods. Visa Insight suggests that 83 percent of freelancers will pay for real-time payments in emergency situations, while 76 percent would pay for real-time payments regardless. Businesses, platforms, and marketplaces adopting real-time payments will:
- Foster loyalty among gig workers. The majority of gig workers say they would perform better if they were paid faster. Grab, a ride hailing platform operating in 10 countries across Southeast Asia, enabled real-time payments acceptance among its drivers. Doing so transitioned a large workforce to becoming banked, and provided them with real-time visibility into their cash flows, access to formal credit, and their improved overall financial wellbeing.
- Enhance employee experience among gig workers. Faster pay is no longer an expectation; it is a need. For an independent worker who depends on gigs as a significant source of earnings, payment efficiency is crucial, and real-time payment ensures this. Real-time payment options improve the gig worker’s experience by expediting payment in an accurate, transparent, and efficient manner.
- Reduce cost of attracting and retaining gig worker talent. Businesses eager to attract and retain top talent must explore real-time payments to compete with the many job opportunities for gig workers in the current market. Attracting and retaining gig workers gives businesses greater visibility into workforce availability and thereby meets client expectations and customer needs.
What this means for your gig economy success strategy
Choosing a payments platform that allows real-time and efficient payout options will help businesses reduce attrition in their global gig workforce and specifically address the following challenges:
- Lack of APIs for navigating restricted currencies. Sending funds through traditional methods is costly, especially when the payments are processed via the SWIFT system. Payment service providers face a common hurdle -- friction in cross-border payments, which further amplifies when the geographies in question are ones with restricted currencies. With no single bank operating across all these corridors, companies can partner with Nium to achieve the same coverage with one simple integration.
- Tackling currency rate fluctuations. High foreign exchange rates arise when banks and other international payment providers charge hidden fees that add to the foreign exchange spread. Businesses are then demotivated to expand into new countries and avail seamless cross-border transactions. Instead, a payment provider should be transparent about the transaction and foreign exchange fees to avoid any hidden costs. Nium offers Volopay real-time foreign exchange rates that do not include any mark-up or profit margin and takes on the risks associated with foreign exchange movements.
- Navigating complex payment processes. Marketplaces need a payments partner that can facilitate quick transactions and offer payment methods tailored to the needs of both the gig workers and their employers. Nium’s payments solutions enable marketplaces to expand their reach, access underbanked segments, incentivize workers, and garner their loyalty through real-time, cross-border payments and customised payment methods. The Nium platform helps businesses overcome the complexities of international transactions, engage with high-quality talent, and ensure growth in a rapidly evolving environment.
For businesses, platforms, online marketplaces, and other gig economy intermediaries, transitioning to faster and more efficient payment methods has never been more important. By directly addressing these challenges, Nium helps businesses, financial institutions, platforms, and marketplaces succeed in their gig economy strategy.