Real-Time Digital Disbursements Boost Long-Term Loyalty Among Gig Workers

Impending recessions aside, new forms of wage access and fast disbursement are hot commodities for businesses that rely on gig workers but are finding them harder to attract and retain.

Up to 16% of all Americans have taken on some form of gig work, yet companies are competing for labor, driving organizations to offer what gig workers desire most: getting paid fast, in the digital forms they prefer.

That’s a tall order for many platforms that aren’t set up for same-day payouts, which makes partnering with disbursements specialists a priority in 2022.

According to Tracy Monson, chief product officer at disbursements platform Onbe, “Compensation is the number one thing that attracts gig workers and builds loyalty,” she told PYMNTS.

Despite this fact, Monson added that 41% of freelancers wait a month between paychecks. And a full 70% say they want to be paid quickly and more often — similar to the way full-time workers get paid.

That divide between expectations and reality is the battleground on which firms are fighting for in-demand workers. “Companies are going to have a hard time retaining their workforce when they can’t keep up with that demand for payment speed,” she said.

Situations like this often take a catalyzing event — say, a global pandemic — to force change, typically because companies can’t afford to lose an already tenuous hold on gig workers.

“The pandemic accelerated a trend that was already happening, but it has supercharged expectations to deliver convenient, reliable, faster digital payments, in any B2C transaction, whether that was on the payment acceptance side, and even more importantly on the disbursement side,” Monson said.

See also: Expanding Payments Choice Playbook

Future Proofing In Action

Understanding that the pandemic caught most companies off guard, Monson told PYMNTS that some were better positioned for fast disbursements when the wheels came off in 2020 and 2021, putting them at a competitive advantage. Others are catching on as gig work expands.

“Pre-pandemic, we were supporting a lot of payment programs that offered choice already — checks, the more traditional options, then virtual cards, digital options, instant transfers to bank accounts,” she said.

“Then overnight we saw the postal systems become unreliable, and people and their families needed to be paid immediately. So, our customers who are already offering those choices were able to pivot easily during pretty challenging times. They were able to take care of their workers and their contractors. It means a lot to be able to respond in that way.”

Calling it a prime example of future proofing, companies that are using the Onbe platform and others like it are able to respond to the off-cycle payroll needs of precious gig workers who don’t have health and retirement benefits from these companies cementing their fidelity.

“Since employer-sponsored benefits like insurance and vacation time typically aren’t offered to gig workers, it is really all about how and when they get paid. It becomes the most important thing,” Monson said. “Speed is key, [and] 25% of freelancers said same day pay is a top factor when they look at engagements or contracts available to them.”

Additionally, she noted that for 34% of freelancers, payout choice is make or break. “It’s about giving them options that align with how they want to be paid and how they prefer to spend.”

See also: Real-Time Payouts Help Gig Platforms Sidestep The Great Resignation

Risk and Reward

With labor shortages even impacting back-office functions like payment processing, it’s more important than ever for companies without in-house capabilities to partner on disbursements.

“When you’re able to answer the ask for speed and choice, it’s improving loyalty, it’s reducing turnover, it’s controlling your recruitment costs, all of these things that are expensive and important when you’re looking to build a loyal workforce,” Monson said.

Noting that traditional payroll infrastructure and process usually isn’t “set up to accommodate a more dynamic gig workforce model, you’re usually pretty limited in the payment methods you can offer. It can also be hard to do off cycle payments or payments outside of your traditional vendor payment cycles. That’s part of the struggle that these companies are having.”

Add to this the fact that “not everybody wants to use their primary bank account, or even has one,” she said. “When you’re limiting people to check or [automated clearinghouse], you aren’t looking at the full spectrum of ways that people want to participate in the economy.”

For many Onbe customers, that involves a mix of options — digital cards, disbursements to mobile wallets and any other options that deliver instant payouts and fast gratification… along with the traditional direct deposits.

There’s also risk involved in juggling the record-keeping, compliance and a slew of issues related to payments, which can quickly get out of control and cause problems.

Monson said when companies try and manage complexities of contractor payments without the right back end, “You’re probably spending a lot of time on things like managing unclaimed property related to checks, or check fraud or check replacement. You’re probably manually collecting tax information and trying to stay compliant in all these different jurisdictions around the world. You might be collecting and storing sensitive data.”

“And this is risky, and costly,” she said. “This is where Onbe can really bring our experience to help these companies outsource some of those pieces and meet the expectations of people they’re trying to pay.”

For global operators, it’s doubly difficult. Onbe facilitates payments to more than 180 countries, taking the burden of managing FX and cross-border wage access and payments off clients’ plates.

“Making sure that you have a payment solution and that you have the right partnerships in place to get payments to people in 180-plus countries is also critical and something that sets these employers apart.”