In today’s digitally connected global economy, employers don’t need to think local when hiring freelancers – but thinking local still applies when paying the freelancers they employ. Gig workers, whether working for an employer in the same country or across the globe, prefer payments in their local currencies and for funds to be quickly deposited into their bank accounts.
Payment frictions are rife in the gig economy, however. They either arise because clients are reluctant to wire funds internationally or because freelancers must endure lengthy waiting periods for payment.
Digital escrow services could alleviate some of these common payment pain points. One gig economy marketplace is Freelancer.com, which aims to facilitate smoother connections between workers and potential employers and eliminate payment frictions. The company acquired digital escrow service Escrow.com in 2015 to enable more efficient payments between employers and gig workers separated by borders.
To gain a deeper understanding of what current market changes mean for freelancers, PYMNTS recently spoke with Sebastián Siseles, international director of Freelancer.com, and Jackson Elsegood, general manager of Escrow.com, to learn how digital marketplaces and escrow services are fundamentally changing the global freelancing market.
Building Stronger Cross-Border Gig Connections
Although the availability of connected technology opens up a world of collaboration between freelancers and employers, Siseles noted challenges.
“We are speaking of people [who] don’t meet, don’t see each other [and] don’t have personal contact,” he said.
Employers often worry they’ll send payments but not receive completed work, while freelancers are afraid they will work but not receive compensation. Language barriers and geographical borders separating the business partners can also raise anxiety levels.
To ease the pains of both parties, Siseles explained how the Freelancer.com platform relies on Escrow.com digital escrow solutions to hold the funds, which are agreed upon by the gig worker and employer, in an escrow account. Freelancer.com uses a milestone payment system, allowing payments to be released to the worker as certain project stages are completed.
The benefit of escrow services, he said, is that workers have the guarantee of payment for their services, while employers are guaranteed to not pay unless the freelancer produces the expected work.
“The freelancer will know the money is available, and the only thing he needs to do is to work and deliver,” Siseles added.
Workers can have funds deposited into their local bank accounts and in their preferred local currencies. They can also receive their funds using PayPal or have payments disbursed to a debit card, enabling cash to be withdrawn at an ATM.
Uberizing Gig Worker Payments
The availability of tools like digital escrow aims to alleviate the stress of international payments for both employers and gig workers by providing assurance that both sides will get what they agreed upon. Elsegood noted that these services are also raising the bar on freelancers’ expectations for compensation, however. As the market has grown and matured, gig workers have become less content to endure long payment waits or be paid via outdated methods, like paper checks.
“The gig economy back in 2010 might have been, ‘Design a website and I’ll mail you a check. Hopefully, I’ll pay,’” Elsegood said. “That doesn’t fly anymore, the same way a taxi doesn’t live up to the standards that Uber has now set. The expectation of the consumer is that I can order a taxi from my phone, and the expectation of a freelancer is they have absolute certainty they will be paid on a certain date, as quickly as possible.”
Without the certainty of receiving payments, freelancers may feel the need to seek legal recourses to collect the money they are owed from overseas partners, an endeavor that can consume precious time and resources. But with the certainty of an escrow payment in place, global freelancers are likely to feel more confident in the business partnership.
“A designer might be an amazing logo designer, but they are not a lawyer,” Elsegood said. “They don’t necessarily know how to write the perfect contract that enforces all of their rights, and they definitely don’t know how to enter into a complicated escrow agreement with a law firm or their banks.”
Siseles noted that demand for these types of digital contracts is likely to grow in parallel to the expanding gig economy.
“The rules have changed for the benefit of both sides,” he said.
To download the Gig Economy Index™, a Hyperwallet collaboration, please fill out the form below.
About the Index
The Gig Economy Index™, a Hyperwallet collaboration, is designed to better understand workers in the gig economy, people who often work in short-term, ad hoc positions – who they are, what services they supply and what percentage of their overall income the gigs represent.
The Index features a survey of more than 2,000 people who have participated in the gig economy in the past three months. Findings identify five main gig worker personas, their payment methods and their goals, motives and satisfaction with freelancing. The Index further breaks down details such as age, gender, race, income, education, time spent in the gig economy and payment mechanisms.