Payments, Sponsored

Gig workers are paving the future of payments

  • The gig economy is here to stay, and it's growing across the globe.
  • These are the four major trends shifting the payments space.
close

Email a Friend

Gig workers are paving the future of payments

Today, access to the internet and personal devices has never been common. The gig economy — in which an individual needs nothing more than a smartphone to become a multi-tasking entrepreneur — is well on its way. 

And it’s not showing any signs of slowing down. In 2019, Mastercard estimated that the gig economy was predicted to grow by 17.4% annually by the end of 2023. The sharp increase in reliance on digital solutions coupled with the economic downfall of the pandemic have only sped things up. By 2027, gig workers are projected to make up over half of the American workforce. And young people are leading the way — with nearly half of all millennials relying on online platforms to make ends meet.

The rapidly growing global workforce comes with a unique set of practical challenges. It requires navigating complex regulation, stubborn legislating, cultural divides, and evolving trends. As the pandemic wanes and the gig economy is here to stay, the payments space needs to pay close attention to the following changes and their impact for what’s next.

Real-time payments is top of mind for gig workers

On average, gig workers earn about 58% less than full-time employees. This means that getting paid on-demand is ever more important — both to meet their financial responsibilities, and continue affording the cost of doing business. Getting paid seamlessly and on-demand is top of mind for independent workers. So much so that 83% of gig workers said they would even pay an additional fee for real-time payments.

As employers acquire talent further and further around the globe, arranging efficient, on-demand payments becomes more difficult. Settling cross-border payments requires third party intervention, and traditionally this means slow, expensive, and high-friction international bank transfers. Depending on where the worker is based, this also means overcoming a secondary regulatory environment and finding solutions for unbanked populations.

Workers’ rights are changing

In the early days of the gig economy, employment platforms escaped the due diligences by classifying workers as independent “partners”. This left workers ineligible for employee benefits like minimum wage and pension. Since then, the courts in both the UK and Spain have ruled that gig workers are benefit-deserving employees. 

SPONSORED

In the US, home to courier giants like Uber, Lyft, DoorDash, and Instacart, the legislative pushback is slower. But as the Department of Labor finds itself carrying the cost of unemployment for gig workers during the pandemic, the shift of burden to employers is inevitable. In California, for example, legislators voted in Prop 22 which keeps gig workers classified as independent contractors while providing them 120% of the local minimum wage and healthcare contribution subsidies.

In developed economies around the globe, legislation is changing to promote benefits and protections, such as paid annual leave, minimum wage, accident insurance, and healthcare subsidies. As gig workers gain equal legislative protections, employment platforms will rely more and more on payments companies to meet the worker needs.

Direct-to-bank payments

Expanding the availability of talent means cross-border payments. Direct-to-bank payments are workers’ preferred method of payment, but come with major challenges. Bank regulations are complex, requiring the receiving end to be licensed money issuer and able to meet international KYC and AML standards. On top of these are the fees incurred for all parties, that chip away at the incomes of both worker and employer. 

To meet the needs of gig workers and employers, fintechs are rising to the challenge of providing agile, nimble solutions. Nium’s gig economy payments solution and global network of partners, licences and real-time corridors helps ease the operational burden for businesses looking to hire and pay gig workers globally. 

“We believe we can be a global catalyst to increase global commerce, removing some of the payments friction which has traditionally held businesses back. The Nium platform simplifies the B2B payments experience by enabling critical financial services to be easily embedded — helping today’s local market players become tomorrow’s global giants.” — Prajit Nanu, Nium’s co-founder and CEO.

Retaining quality talent 

The gig economy is growing largely due to the flexibility it offers — from hours worked to the types and number of jobs held. In the height of the pandemic’s economic downfall, this flexibility helped millions of people support their households, and at times even provide greater income than they would through full-time employment.

With the gig economy here to stay, and the economy coming to rely on local and global talent, the long-term viability of the workforce will depend on businesses planning ahead. Minimum wage alone is not an effective retention strategy. To keep quality gig workers, companies will have to make efforts to offer fair protections, easy payments, and attractive compensation packages, like early delivery and retention bonuses.

The gig economy promises talent availability at scale. But seizing this moment means being equipped for cross-border payments, currencies and cultures. Read Nium’s eBook Paying it Forward: The Future of Payments in the Gig Economy to learn about the four trends to be prepared for this opportunity.

0 comments on “Gig workers are paving the future of payments”

Outlier OpinionsMakers

Podcasts, Sponsored

‘What fintechs have done right is understanding who their customer is, and building for them’: BlueVine’s Herman Man

  • There are 30 millions SMBs, and they create two thirds of the jobs in the US economy – who’s building for them?
  • BlueVine’s CPO Herman Man joins us on the Tearsheet Podcast to talk about the importance of customer-product fit, and what’s next for digital-first banking solutions and the fintech ecosystem.
BlueVine | January 19, 2022
Sponsored

How B2B fintech lenders can sharpen their analytics with external data to increase qualified leads

  • Many fintechs are addressing niche market segments with innovative solutions, like SMBs, which come with unique challenges.
  • In the second of this article series, we discuss how the data can be leveraged in generating leads and accelerating the sales pipeline.
Explorium | January 18, 2022
Blockchain and Crypto, Sponsored

Navigating cryptocurrency: Three areas of focus for financial institutions

  • Understanding what’s out there is a critical step to identifying how your financial institution fits into this emerging environment.
  • Education and awareness are key moving into 2022, especially in three key areas.
Fiserv | January 12, 2022
Sponsored, The Customer Effect

The increasing role of personalization in retail wealth management

  • In a recent survey by ThoughtLab and Publicis Sapient, 49% of investors put simple, intuitive digital experience as top priority – but only 18% are very satisfied with their current advisor’s digital experience.
  • With 44% of respondents planning to move their funds over the next 2 years, better personalization has never been more important.
Publicis Sapient | January 06, 2022
Blockchain and Crypto, Sponsored

Navigating cryptocurrency: Building on consumer trust with innovative technology

  • The significant market capitalization of cryptocurrency and its growing popularity are creating a strong movement to incorporate cryptocurrency into payments, investments and banking capabilities
  • As mainstream curiosity and interest in cryptocurrency increases, more companies are facing strategic decisions around how to accommodate the use and consumer demand of the new currencies
Fiserv | January 05, 2022
More Articles