Amidst the pandemic, there has been a major surge in demand for gig economy services that support shopping from home, or food delivery services such as Uber Eats and DoorDash. As on-demand services increase in popularity, gig economy platforms such as Lyft and InstaCart are dominating the markets once led by traditional providers, which is shifting what is considered normal in employment practices. In fact, in the Intuit 2020 study on the future of gig employment, it was shown that over 80% of major US-based companies are planning on shifting a portion of their full time employees to some form of temp position or gig-worker agreement.
With the amount of gig economy employment increasing everyday, companies are struggling to find effective ways to pay their workers that do not work on traditional compensation schedules. In a study done by PYMNTS.com it was found that 51% of gig-workers would prefer being paid through an alternative to direct deposit.
In this article, we will overview the realities of paying gig-workers and best payment method businesses should consider when compensating their gig workers.
“In a study done by PYMNTS.com it was found that 51% of gig-workers would prefer being paid through an alternative to direct deposit. “
The Gig Economy Market
Gig economy workers are independent contractors that provide services for freelance sites, online marketplaces, and on-demand service platforms. Gig workers are usually paid a piece-rate for the amount of gigs or orders completed in a shift, paid for the amount of sales made or referred, or are paid for completing a project or service. 2019 data from Mastercard showed that the global gig economy market generated more than $204 billion in gross payment volume. This payment volume is forecasted to more than double in 2023, with a compound annual growth rate of more than 17%, to reach roughly $455 billion. The key drivers behind this growth are an increase in the digitization of the economy, the cost of living, and most significantly the cultural shift that supports a more flexible work life.
Gig Economy Payment Challenges
With the market for gig economy workers rapidly expanding there is a growing discrepancy between gig workers workload and their speed of pay. PYMNTS.com reported that only 25% of gig workers received payments within a week of providing services. With gig workers completing independent jobs daily, there should be some way for them to collect and get paid as they complete gigs. However, unlike in the regular workplace where workers can be handed a cheque or cash, gig economy workers are paid in efficient ways such as bank transfers and international payment processors that take mass amounts of time to complete the payment cycle. The use of outdated payment infrastructure is stalling platforms ability to not only pay gig workers instantly, but continuously hire new ones as the backlog of payment processes stalls growth.
“Unlike in the regular workplace where workers can be handed a cheque or cash, gig economy workers are paid in efficient ways such as bank transfers and international payment processors that take mass amounts of time to complete the payment cycle.“
What is the Best Way to Pay Gig Workers?
To support the mass amounts of people joining the gig economy, platforms must say goodbye to traditional pay cycles and payment methods such as EFT, ACH and cheques. The antiquated payment methods are costly, time consuming and preventing platforms from reaching their full potential of the gig workforce’s needs.
Introducing Real-Time Payments, a flexible, fast, and easy-to-use alternative payment method to payout your gig workforce in real time to allow you to scale your business and expand with the growing demands of the gig economy.
How Does Real-Time Payments Work?
Platforms Set up Instant Payments
Platforms integrate with a real-time payments provider to offer instant payment to gig workers through their very own application. This enables the application to offer gig workers the ability to turn on an instant payment option.
Gig Workers Set Up Accounts
Gig workers will be able to access the platform’s application and set up an account to enable the instant payment option. The gig worker would simply need to input the number from their debit or prepaid card and they are ready to go.
A Gig is Completed
Once a gig is completed, a worker’s earned wage total will be made available to them and displayed through the platform application. Then, the worker will have the option to select an instant payout, which will trigger an instant deposit of earned funds into the workers bank account.
Access to Funds
Once the funds are deposited into the gig workers account, they can use these funds to pay bills, transfer funds, purchase goods at a store, or even increase savings for future expenditures.
Benefits of Real-Time Payments
Real-time payments expedite gig workers payments in a transparent, accurate and efficient manner. This enables businesses to disburse payments to the gig workforce in real time as gigs are completed. Earning can be deposited directly into the workers account every day of the week, even on holidays and weekends. Businesses can attain better cash flow and prevent the rise of unexpected expenses.
Brand the Employee Experience
A real-time payments system allows your businesses to brand every step of the payment process for your employees from redemption emails and microsites, to physical and virtual card designs to cardholder portals.
Provides workers with the ability to choose how they are paid. Whether they want funds sent directly to a debit or credit account, or onto a physical or virtual prepaid card – the choice is up to them.
Reach Your Unbanked Workforce
Unlike other solutions, GigPay doesn’t require a bank account to receive payments, allowing your unbanked employees to receive payments onto a physical or virtual prepaid card avoiding costly cheque-cashing services.
Increases Freelancers’ Loyalty
Real-time payment solutions don’t just satisfy gig workers; they also increase their loyalty to a brand or online marketplace. According to PYMNTS.com’s recent analysis, 85% of gig workers say they would perform better if they got faster payments.
“Earning can be deposited directly into the workers account every day of the week, even on holidays and weekends.“
Interested in Setting up Real-Time Transfers for Your Gig Workers?
To create a fully branded and integrated payments platform to pay gig workers straight from your application, visit berkeleypayment.com for more information on getting started today.