$298 billion. Are we there yet? The answer is pretty darn close. $298 billion is the volume of wage disbursement the global gig economy was meant to hit this year. The number of freelancers has grown significantly over the past few years, accounting for one of the biggest portions of the global workforce.
In fact, did you know?
The gig economy is expanding 3X faster than the total US workforce.
By 2027, over 50% of the US workforce is projected to be participating in the gig economy. With 70% of freelancers find work on gig economy sites and online marketplaces such as Fiverr, Rover, and Jobber.
This article explores the benefits ACH Payments for gig economy payroll, how earned wage access fits in and why instant wage disbursement is more important than ever.
One thing is sure – The growth of on-demand services and the sharing economy has created new market segments for everything from professional and household services to construction workers and food delivery apps. However, these workers must be paid reliably and on time for both to flourish.
Real-time payments have become the expectation of contract and freelance workers. They want to be paid at the end of a shift or at the end of an assignment. The life of late payments and unpredictable income creates financial stress that affects their overall quality of life; however, by providing a payment platform that ensures all parties' needs are satisfied, businesses can ensure that both they and their customers get what they want.
"Instant disbursements would be really good and provide us an edge. The main complaint we currently receive is how slowly gig workers receive their money." — Global Professional Services Platform
According to a recent study completed by ZayZoon, only 66% of survey respondents had heard of Earned Wage Access (EWA). With the recent surge in popularity with more and more organizations committed to the uptake of EWA, the reality is that this number will change quickly.
In fact, Citizens Financial surveyed 200 middle-market companies and found 71% of them reported already using EWA services in some form.
Earned Wage Access (EWA) is a financial service that allows employees to borrow a portion of their wages before payday instead of waiting for a biweekly or monthly payday to arrive. With EWA in place, employees can access a part of their wages they have already earned when and if needed. Because of this ability, earned wage access is seen to have the potential to significantly reduce the financial stress among gig workers in America. As a matter of fact, we expect it can play a large part in a decrease in overdraft fees, late payment fees, and high-interest payday loans.
Here's an example of how it works: A worker, Haider, is a part-time delivery person. At the end of a shift, he verifies his hours with his manager through an app or platform, and upon completion, the money is deposited into his account.
ACH payments are an ideal payment method for gig payroll providers and Earned Wage Access (EWA) and not just because they are digital ( because, let’s face it, it is nearly impossible to pay on-demand wage disbursements through a check). They are mainly ideal in part due to the following reasons outlined below:
Same-day ACH payments are an ideal payment method for businesses operating in the fast-paced and dynamic world of the gig economy. Send payments directly to freelancers or employees in their bank account on the same day. Same-day ACH allows businesses to process payments faster, with funds being available to workers on the same day as the payment is initiated. By using ACH payments, providers can ensure that gig workers receive their earnings as quickly as possible, which can help to reduce financial stress and improve overall job satisfaction.
More often than not, when disbursing wages, it is for repeat clients or employees. With ACH payments, much of the payroll process can be automated. ACH payouts can be pushed at scale, utilizing bulk payment solutions and recurring transactions. In addition, ACH payments can be scheduled in advance, which allows for better cash flow management. This is particularly important for gig economy payroll and EWA providers, who need to ensure that they have enough funds to cover their payments. By introducing automation and reducing the need for manual intervention, you get faster processing times, reduced errors, and lower administrative costs.
Another benefit of using ACH payments for gig economy payroll and EWA is their transparency. ACH payments offer detailed transaction records that can be used to track payments and monitor financial activity. This transparency is essential for gig workers, who need to know when they can expect to receive payments and how much they will receive. By providing detailed transaction records, ACH payments can help build trust between workers and their employers, leading to improved job satisfaction and retention rates.
And can be applied to various payment types, including payroll, vendor payments, and EWA. This flexibility is essential for gig economy payroll and EWA providers, who need to be able to provide a wide range of payment options to their customers.
ACH payments are secure and reliable as one of the safest ways to transfer money. All ACH transactions are verified through the Automated Clearing House, making it harder to commit payment fraud. Not to mention, when an ACH transaction is executed, it means that the receiver has a verified bank account.
Another advantage of ACH payments is their relatively low cost. Unlike other payment methods, such as wire transfers or cheques, ACH payments typically have very low transaction fees. This can help gig economy payroll and EWA providers keep their costs down while still providing fast and reliable payment options to their customers.
Solving a major pain point for platforms that need to grow. Manual inputs and individual wage distribution are time costing overhead. The ability to easily pay and track payouts to multiple customers from one platform means workforce hours can be redirected to more valuable tasks.
Overall, ACH payments are a fast, inexpensive and reliable method of automated payments that is ideal for payroll and EWA in the gig economy.
By deploying this payment solution, gig economy payroll and EWA providers will improve efficiency, reduce administrative burden, fraud risk, and cost for businesses operating in this fast-paced and dynamic environment.
As more people become involved in the gig economy, businesses that adopt ACH payments will be better positioned to attract top talent and improve their bottom line by staying competitive in an increasingly crowded marketplace.
Want to stay ahead of your competition and attract the best talent you need? Choose ACH payments and experience the benefits of automated payment processing today.