The gig economy is booming, with more and more people turning to gig work for either their livelihood or a side hustle. Given that one of the biggest challenges faced by freelance workers is the issue of payment, it comes as a big surprise that most gig platforms aren’t even paying attention.
How many digital enterprises are zeroing in on the gig economy payment experience? The answer is fewer than you think. Too many still offer payment solutions that are outdated, unreliable, and not suited to the needs of modern freelancers. But that is about to change.
This guide explores the importance of earned wage access, the benefits of recurring payments alongside flexible payment options, and how fixing common payment problems help businesses scale.
Side Hustle Economy - The Rise Of Gig Worker Platforms
Undoubtedly, the early years of this decade have brought about the infamous “side hustle” culture. While the concept is not new, there is a sharp increase in the freelancer and gig worker economies that is only expected to continue.
It seems many of us report juggling at least two different roles:
• 36% of Millennials
• 30% of GenX
• 21% of Boomers
And Gen Z leads the charge at a whopping 40%.
With this kind of market growth, businesses should be taking steps to ensure their technology meets the needs of their customers.
Case in point, if we look at the following three gig platforms, we can see they all have one thing in common, an integrated payment solution that delivers fast fund disbursement and an ability to scale.
• A hospitality platform bringing Earned Wages Access to the sector, helping service workers get paid faster.
• A payroll solution bringing innovation to the entertainment industry by eliminating paper-based workflows.
Give your “customer” what they want and what they need, and you are more likely to succeed. It is essential to think of gig workers as customers of the platform. Why? Because that final payment process is make or break. No need to invest in a customer acquisition strategy if the payment journey doesn’t deliver the convenience they want.
And these days, a positive payment experience ensures retention. And that matters to every business. In fact, improving customer retention by just 5% can increase your profitability by anywhere between 25-95%.
As gig platforms vie for market share, everyone is looking for ways to differentiate themselves by offering a unique selling proposition. They can do this by providing instant payments via an integrated payment solution. This maximizes the employee experience and helps build customer loyalty by making them feel valued and giving them peace of mind that their money will be there when they need it most (i.e. when they get paid).
Gig Economy Payment Problem: Late Payments
The fickle nature of gig work can make it difficult to budget and plan for expenses. This uncertainty can also affect a worker's quality of life and finances, leading to financial stress. Late payments are a common problem for freelancers and independent contractors, who often do not receive payments on time or in full. Delayed payments disrupt a gig worker's ability to meet financial obligations such as rent or bill payments.
The Fix: Earned Wage Access and Faster Payouts
Deliver faster payouts and real-time funding options. As the gig economy grows, so does the need for faster and more flexible payment solutions. As outlined above, maximizing the employee experience delivers better retention rates. Customer-centric digital technologies become the way forward in a battle for talent. One of the most important benefits for today’s employees is to get paid on time, in their way, and fast. Earned wage access programs have hit their stride in the hospitality sector as a way to gain a competitive advantage. Gig workers are not willing to wait for payroll drop. They want their pay in real-time.
In fact, 87% of Gen Z and 84% of Millennials said they’d be more interested in applying for a job that pays them the same day they work.
With programs like EWA in place, businesses can pay workers as soon as they earn their wages. This means that workers can access their money faster and more securely than if they had been paid by check or cash.
Inconsistent payment methods can be a hassle for freelancers and contractors, who often have to navigate several different payment methods. For example, some might be paid through cheques, direct account payments or Interac e-Transfers. For them, managing multiple payment methods can be time-consuming, especially considering each method's potential fees and processing times.
The Fix: Flexible Payment Options
The gig economy is a diverse and global phenomenon. It's important that your platform offers flexible payment options to accommodate your customers' needs, no matter where they're located. Your customers want to receive their funds in a way that works for them; therefore, providing multi-channel payment rails is a must. Offering different payment solutions such as bank account payments, Interac e-Transfer, ACH, and real-time payment methods goes a long way to keeping customers loyal.
17% of the gig economy companies indicate payables inefficiencies are their most serious challenge. The payment process is one of the most important parts of any platform. It is also one of the biggest stressors and one of the most labour-intensive. As payments become the front-facing component of the everyday business experience, companies must get on board with new trends and technologies to stay current, grow market share, and increase conversion rates.
Let’s break down the scenario.
A freelancer completes a job for a gig platform and submits their invoice for payment.
The platform receives the invoice and verifies that the work has been completed satisfactorily, and begins the manual processes to disburse funds. And we know this can take several days to complete.
By this time, the freelancer could receive partial payment or might still be waiting for payment for other completed jobs as the platform continues to manually process payments as invoices are received.
For digital enterprises that pride themselves on delivering a fast solution, this process is riddled with payment inefficiencies. When it comes to the payment process, customers are less patient and more demanding. It has to be simple, fast, and smart.
The Fix: Automated Recurring Payments
Introduce auto-recurring payments into your strategy.
By automating employee pay, you can:
• Help stabilize cash flow
• Streamline the transaction experience
• Eliminate the need for manual payment input
• Increase on-time payouts
Automated payment setups save time and money by streamlining the payment process. Outdated payment processes that require the customer to repeatedly enter their banking information are not only frustrating but error-prone as well.
Automating the process reduces the risk of errors caused by human input and eliminates the need for manual processing. This, in turn, cuts down on labour and saves time for both parties involved.
Problem: The Top Payment Pain Point In Every Organization
Inefficient payment processes are a real headache for businesses that need to scale. As outlined above, everything from manual data entry to paper-based invoicing and outdated payment systems can slow companies down.
Can Your Business Scale?
The ability to handle large volumes of payments is crucial for any business that processes a lot of transactions on a daily basis. Is your platform able to do the task?
Consider the number of payments you might be processing in the month and think about the dedicated employee resources tasked with managing it.
Accessibility Including Cross-Border Payments:
Currency exchange rates, transfer fees and additional paperwork are just some of the payment obstacles that can hinder gig worker transactions. Digital platforms need an accessible solution that easily facilitates cross-border payments so workers can access their funds quickly and easily, no matter where they live and work.
The Fix: The Ideal Scalable Payment Solution
VoPay’s Fintech-as-a-Service technology allows gig platforms to take ownership of their payment operations with a dedicated suite of financial products designed to fuel growth and improve retention rates.
Don’t leave your gig workers waiting - get access to VoPay’s powerful financial suite, including real-time payments, AR/AP automation, recurring payouts & more.
