It truly is the most wonderful time of the year — to bring in some extra cash, that is.
Gifting is expensive. Consumers in the U.S. planned to spend an average of $908 on holiday gifts this past year, up 8 percent from the average expenditure in 2015. Among the affluent, average spend was projected to be $1,513.
An increasing number of workers rely on the gig economy for cash for short-term spending goals or as a primary source of income. According to the PYMNTS Gig Economy Index, the number of Americans working gig jobs and short-term, ad hoc positions grew at a rate of 50 percent from 2005 to 2015. In that time, the gig economy gained 9.4 million new workers, outpacing the U.S. economy as a whole.
PYMNTS’ Karen Webster and Michael Ting, SVP of digital markets at Hyperwallet, sat down to discuss how the holiday season affects gig workers, the gig economy at large and the payout solution provider Hyperwallet, which, among other things, facilitates payments in the gig space.
“There’s no doubt about it,” Ting said. “During the holiday season, all of us tend to oversubscribe in terms of things that we commit to. We’re doing more things than we’re capable of doing. Having services available to us so we can accomplish more in a shorter time period is long overdue.”
Ting noted that, in general, participation in the gig economy is about capitalizing on opportunity.
“Workers may be idle on a particular platform for several months. A certain season or certain period comes up where they need extra cash, or they recognize that there will be extra demand. It’s a win-win for everybody — you can flip a switch, turn on an app and they’ve got the opportunity to earn money.”
“When you think about the gig economy supplier base,” Ting told Webster, “there are the people who treat it like a hobby, and there are the people who treat it like a job or a small business. The latter, you’ll start to see those types of people be more entrepreneurial and opportunistic when they see that the seasonality peak is about to start.”
The opportunistic feature of the gig economy creates seasonal ebbs and flows similar to those traditionally seen in the retail space, said Ting. But the services gig workers provide are different from what retail offers, and sometimes, gig work indirectly facilitates consumer engagement in retail.
He gave the example of ridesharing and delivery services, where increased consumer demand during the holidays leads to more opportunistic gig workers cashing in.
“There’s extra travel — people are getting rides to the airport, people in urban areas go to shopping districts without wanting to get in their own car, park and deal with traffic,” said Ting. “They just hop in an Uber, or they hire someone to pick up an item and deliver it to their home.”
Though gig work and retail see seasonal spikes, Ting stressed that gig work at large is fundamentally different from seasonal retail employment.
“It comes down to control,” he told Webster. “For a temp worker, you’re typically working for a single employer and beholden to their schedule, their shifts, the training period. The time you’re actually earning real money is out of your control. Gig workers can jump in and essentially own their own business, and at any time, they can turn it on or off.”
Additionally, Ting noted that the gig space is far larger than the on-demand services often referred to in discussions of the gig economy.
“It doesn’t necessarily have to be work per se,” he said. “It can be renting out property or idle assets, or it can be selling stuff you made or things you want to get rid of from your garage. There are all of these outlets for all of these people to earn extra money, and I think that’s the big distinction.”
And many of these outlets are ideal for supplementing income quickly to stock up on gifts — renting out space while away visiting family and selling unused items to buy up gifts that could get more mileage.
As gig work peaks during the holiday season, so, too, does the need for streamlined payments solutions and security, Ting told Webster.
“Where there’s an anticipated boost in volume,” he said, “and particularly where we expect to see an inflow of new users we’ve never seen before — who we don’t have a benchmark for normal behavior for — extra vigilance is required on our part and the part of our partners to make sure that we are detecting potentially suspicious activity.”
This is especially important during the holiday season when fraud also spikes. This past year, retailers were warned to expect 43 percent growth in online fraud over last year.
During the holiday season, Ting told Webster, Hyperwallet’s customers expect to see an influx of new private data.
“And the fraud community knows that, too,” he added. “During these periods, consumers, in general, tend to be a little less guarded and conservative as to how they share their information online. It becomes our responsibility, on behalf of our customers and the company, to ensure that security is in place, that we’re doing the monitoring for them so that they can run at full throttle during this abbreviated period.”
Because the holiday season is a relatively brief, discrete period of time, Ting said, people often expect things to happen faster.
“Buyers want to pay faster, and they want things to be shipped to them faster,” he told Webster. “The suppliers want to perform as quickly as they can and get paid faster. The burden is on us to ensure that the cash flow is consistent and those faster payments are reliable and that there’s no risk of us having to reverse any transactions — that we can get people paid in the most reliable way.”
As important as security, if not even more important, for Hyperwallet during the holiday season, said Ting, is customer support — especially for a large, demanding customer base who may be new to the process.
“Customer support plays an important role in influencing overall satisfaction with our service and how our clients — these marketplaces and these platforms — regard us as we go on to the rest of the year,” he said.
Overall, the holiday season is an opportunity for Hyperwallet to showcase what they do and highlight their strengths, said Ting. “If we can handle it during a peak period, it gives our clients confidence that we can handle the normal flow of the year.”