The gig economy is blossoming, but changing at the same time. And as with any evolution of an industry that offers convenience and flexibility, there’s often a tradeoff. Freelancers may need to chase work, sometimes across multiple locations (and jobs). But they should not have to chase payments.
In the latest Data Drivers installment, Michael Ting, SVP of Digital Markets at Hyperwallet, told PYMNTS’ Karen Webster that online marketplaces can promote competitive advantages among workers by making sure that payments are handled with transparency and timeliness, opening the door to cemented and mutually beneficial relationships.
Data Point Number One: 81 percent.
This is the percentage of gig workers who said that they would do more gig work if, in fact, they could be paid more quickly. A surprise? Not so much, countered Ting, who noted that “the reason for that is because the frequency and the speed of payments serve a lot of different purposes.” A lot of gig workers, he said, use their jobs to support basic living expenses, and others treat freelance work like a small business.
The reasons these workers take on the work they do helps determine the desire for speed and frequency in payments, said Ting. The gig worker who treats his or her activity like a small business, where there may be maintenance or manufacturing of items, such as a vehicle or a home, “you need working capital to do that, and so you do need to have a steady inflow of cash.”
Against that backdrop, speed can serve as a proxy for certainty, where in freelance work, there can be anxiety over getting paid if speed is not there or payments are not reliable, which can lead to apprehension on the part of workers to take on more of that work in the first place.
There are, of course, different mechanisms to get people paid quickly, said the executive, including Visa Direct and prepaid cards, and within stored value accounts such as wallets. The idea, for these freelancers, that money winds up in some sort of account that they can control, said Ting, is a critical piece of payments as they are embraced by the gig economy. Marketplace platforms have a role here: eliminating the vagaries of dealing with paper checks, he added. There is room for improvement, as 13 percent of gig workers wait as long as four weeks to get a paper check in the mail.
Data Point Number 2: 59 percent
This is the percentage of eCommerce sellers who state that how quickly they get paid is very much an indicator of their loyalty to the platform. That makes sense, said Webster, as people would conceivably want to do business with a platform that continues to enable speedy payments. Ting said the marketplaces must deliver on their promise of ease of payment in the digital economy. If payments activity does not live up to the promises extended by the platform, then the platform has failed its responsibility.
Competition among the platforms is intense, said Ting (and platforms regardless of vertical may compete across the same pool of workers). In fact, many workers work across multiple platforms to augment their income opportunities.
To maximize what they take home, agreed Ting and Webster, workers will seek to minimize the fees they must pay to the marketplace. As much as 80 percent of gig economy workers said they would leave a given platform should the fees be perceived as being too high.
Data Point Number 3: 65 percent.
This is a high-level statistic that shows just how sticky the gig economy is, as a full 65 percent of contract workers would not leave the freelance space to take on a full-time job. This data point runs contrary to the thought that giggers gig because they cannot get full-time work. Said Ting, “most of us have grown up with full-time work,” and as such, the steadfastness of gig economy workers may be a bit surprising. But then again, there is a lot of flexibility when it comes to lifestyle, said Ting, and there is also the opportunity to leverage new skills to boot.
The platforms, said Webster and Ting, also can provide value beyond payments, stretching across, for example, access to benefits that can help shape freelancing into an empowering choice akin to running a small business and not “just another way of working.”