How real-time payments create an opportunity for gig workers and marketplaces.
The global report on 'Gig Economy Payment Satisfaction suggests' 73% of workers will exit the marketplace due to payment problems. Additionally, 54% of them said it either takes too long to get paid or an invoice takes more time to get a response. Another study indicates that 85% of gig economy workers would add more input if they got paid faster. All these numbers suggest freelancer workers want reliable payment in time, using their preferred currency and without having to meet additional withdrawal service fees.
Today, the world is shifting from the traditional office to remote working in the wake of the global pandemic. This situation has also increased the number of freelancers in the world to 9.2 million. Businesses of all sizes are diversifying their talent by cutting through geographical barriers and hiring experts from different countries. The potential benefits of this remain accelerated growth and quick project delivery. Apparently, the shift to remote and gig marketplaces has faced a disconnect between hiring companies, payment processing, and the gig workers.
How to Pay Gig Economy Workers?
The shift to working at home has also shifted payment trends.
Ridesharing services around the globe are witnessing low demand due to little to no traveling activity after the pandemic. Whereas door-to-door eCommerce is thriving, with companies such as DoorDash, Uber Eats, and Gojek experiencing exponential growth. According to the Internet Trends Report, door-to-door delivery services will acquire traction and gain permanent market share due to the effects of Covid-19.
The sharp increase in demand for such services has created the need for hundreds of thousands of warehouse drivers and warehouse workers across Amazon and InstaCart. These trends in shopping and eCommerce are changing so fast that eCommerce platforms have already shifted from traditional payment methods to real-time payments. Businesses of any size that have adopted real-time payment have a strategic advantage over their competitors. Besides, they are winning over loyal contractors and widening their market base beyond borders.
Grab - a ride-sharing company based in Singapore dominated the ride-sharing space by adopting real-time payments for drivers. This gave it the advantage over its competitors, who released payment after every few days. Hence Grab could easily and actively recruit more contractors and reach a broader market. The company found out the majority of the drivers were not happy with the existing payment process. The majority of the drivers wanted access to payments in real-time and daily. Grab delivered just that by adopting a real-time payment system which increased the loyalty of contracted drivers.
What is a Reliable Real-Time Payment System?
A reliable real-time payment system for gig workers is fast, secure, and borderless. There should not be any interruptions when depositing funds, making and receiving payment. The payment processor must be able to handle large volumes of payments, process fast payouts, and provide service even to the unbanked gig economy.
In 2019, the Federal reserve invited extensive feedback from internet stakeholders on its planned real-time payment service FedNow. In response, Google detailed a successful demonstration of real-time payments using India’s Unified Payment Interface as a case study.
The Unified Payment Interface is a payment infrastructure that supports multiple bank accounts. It deploys them in one application for any of the associated banks, combining a diverse set of banking features, merchant payments, and seamless fund routing under one roof. Google identified three outstanding features of the Unified Payment Interface :
Open system - Adopted standards and frameworks are open source for businesses and other technologies to implement their solutions.
Real-Time transactions - Transactions and money transfers are done in the real-time
Interoperability - Interoperability to link functionality across different platforms
If adopted in any business, such a system would guarantee flexible, swift, and contactless payments to its workers. Furthermore, the gig workers would become productive and committed to the business platform.
How to Pay in Real-Time
XanPay provides an infrastructure for real-time payments. Businesses can use XanPay's solution to perform near-instant transactions with low processing fees. It also facilitates marketplaces to facilitate local payments to their customers. The solution creates a win-win situation for freelancers or gig workers and their clients. Apart from real-time payments, XanPay also allows automatic conversion in the preferred payment method.
XanPay’s infrastructure integrates its proprietary C2C-routing-technology to facilitate cross-border payments between payment service providers, merchants, and their customers. Moreover, stakeholders can leverage the advantages of XanPay payment architecture without any risks of custody.
Verdict: The Opportunity in Improved Financial Infrastructure
Corporates interested in real-time payments are growing exponentially, and the forecasted growth for the industry is at 100% by the end of 2022. According to a study by TD Bank, a company's potential to process fast payouts easily captured the interest of a substantial number of corporate respondents. Nearly 42% consider the integration of online banking with real-time payments is going to be the biggest innovation in the eCommerce sector in the next five years.
Already, Real-Time Payment (RTP) platforms are gaining traction worldwide and have created investment opportunities in nations such as Taiwan, Singapore, India, and Brazil. In the near future, real time disbursement of payouts will become the only method of successfully attracting gig economy professionals and marketplace sellers. On the other hand, the gig economy is projected to grow and will require more partnerships with financial solutions to simplify payment processing and maximize its market share.