The gig economy is expanding three times faster than the total U.S. workforce and evolving what was once viewed as a “side hustle” trend into a new way of working. In fact, 36% of U.S. workers are part of the gig economy today, with over 50% of the U.S. workforce anticipated to participate in the gig economy by 2027.
While interest in this type of work is growing rapidly, especially among younger generations, there are still critical gaps in fast and secure payment structures that will allow for the sustained advancement of the sector.
When thinking about the gig economy, there can be some confusion about what defines a “gig worker,” so let’s break it down. A gig worker is someone who participates in short-term contracts or freelance work. This can include anyone from ride-hail drivers to freelance writers.
More and more professionals are drawn to this work style, often seeking flexibility, competitive wages and faster payments. However, given the fickle nature of the gig economy, a unique challenge presents for both businesses and workers when it comes to efficient payouts, payment tracking and cash flow management, impacting the financial security of both the business and its gig workers.
Too many businesses still offer outdated, unreliable payment methods, which are often not suited to the needs of modern gig workers. For employers looking to grow with the gig economy and understand how to better offer advanced payment solutions, here are some important considerations to help retain strong employees in the long run.
Broadly speaking, late payments can be a common challenge for gig workers as they often do not receive payment on time or in full. These delays may seem inconsequential on the surface; however, they are disruptive to a gig worker’s ability to meet financial obligations such as rent, bill payments and more.
From a business perspective, while the gig economy is booming, supply and demand aren’t lining up. We currently have too many gig platforms and not enough market demand to leverage all of them. There is an app for everything, and while that is great for customers, legacy gig economy brands are holding a large portion of the gig labour, making it difficult for new companies to make a splash in the space.
That means that companies are not only fighting for customers but also facing a labour shortage. Giving gig workers access to their money faster can remove a financial barrier as well as build better trust and motivation to sustain long-term employment with gig platforms.
The way people are making money is changing, so our way of making payments needs to shift with it. At the end of the day, gig workers want fast, convenient, secure and traceable payment methods. As the gig economy expands, the need for solutions that provide these payment offerings becomes even more critical.
Inconsistent payment methods can be a major pain point for gig workers who often have to navigate several different payment methods. It’s important to consider offering various payment solutions to retain these contractors and freelancers.
Trust is critical to the continued advancement of the gig economy. Facilitating feedback and having an open line of communication between gig workers and their employers will enable employers to better understand gig workers’ motivations (such as stable cash flow) and address pain points (such as late payments).
Integrating new systems and changing the way things have been done can come with growing pains for some people. That is why user feedback will be instrumental when implementing solutions such as automated payments. From there, it is the responsibility of the employer and its payment platform to evaluate challenges and build on successes to best service gig workers.
The gig economy has the potential to thrive. To do so, we need to ensure payment solutions are meeting the needs of its workers. As we see the gig economy expand with significant growth expectations in coming years, anyone that leverages gig services in both personal and professional capacities should consider how they can get money into gig workers’ pockets faster.
How To Better Support Gig Workers Through Payment Modernization was originally published on Forbes on August 8, 2023.
Hamed Arbabi, CEO and founder of VoPay, a recognized leader in the Fintech industry. VoPay offers industry-leading financial technology to software platforms with a focus on Gig Economy Software Solutions. VoPay’s Fintech-as-a-Service platform embeds financial services and real-time payment capabilities into existing applications, products or services through a single and scalable API.
Discover how VoPay’s intelligent payment infrastructure can work for you at: https://vopay.com