Even in the digital payments world (and as more people travel more often, sometimes working freelance gigs along their journeys), the concept of home remains strong. That is providing opportunity to firms that facilitate temporary work and its wages.
Peter Shore, general manager of payments services firm Transpay, and Guillermo Bracciaforte, co-founder of online freelance marketplace Workana, recently spoke with PYMNTS about the payment preferences of gig workers and making gig economy payments more efficient.
This month, Transpay announced that it has been hired by Workana for payments to those workers in the United States, Latin America and Spain. The deal comes as the freelance, or gig, economy becomes ever more significant, and in various regions of the world. A Workana survey, for instance, found that 23 percent of Latin American respondents plan to become full-time freelancers.
As competition increases among companies striving to provide payment services to those workers, companies such as Transpay can do tasks of value like keeping up with worker preferences, Shore said. That means offering multiple payment options to prevent what they call platform leakage — that is, users leaving a platform for richer pastures that have the desired payments. The acceptance side already has multiple options, Shore said. It makes sense that the payout side has them as well. That also means increasingly depositing pay directly into workers’ local bank accounts, even if those workers are holding jobs in their non-native countries.
“Traditionally, getting paid while working abroad has been difficult,” Bracciaforte said. However, he and Shore both said that workers are growing less patient with work, or payment processing servers, that do not meet the growing demand to be paid into local bank accounts.
“Nowadays, people are changing lifestyles more quickly than before,” Bracciaforte continued, especially as the web and affordable computers — to say nothing of mobile phones — encourage the adventurous to seek paychecks in foreign lands. Offering multiple payment option is key, of course — PayPal and Payoneer are popular methods. However, “most of the time,” gig and freelance workers want to be paid into their bank accounts back home.
Part of the reason for that is cost. That includes saving freelancers from having to pay excessive fees for ATM and other transactions, fees that are often rendered moot by deposits into the workers’ bank accounts.
In fact, the emerging opportunity for those direct-to-bank payments is part of what pulled Transpay into cross-border payments for gig and freelance workers. Transpay leaders have significant experience from the acquiring industry, Shore said, and the company has built “direct relationships” with financial institutions (FIs) in most countries. The company’s Pay by API is designed to best serve companies that handle at least $250,000 annually in cross-border payment volume.
Proving payment services for freelance and gig workers are a relatively direct undertaking, and while value-added services can likely win new customers, Shore laid out four principles that are even more important to pleasing users.
Regulatory compliance, of course, stands as a vital issue, he said. So does processing payments in a “seamless and transparent” manner — meaning, for instance, that users should know exactly what is going on with their payments and bank accounts, and not be surprised by hidden fees. Speed of transactions is also a top priority. Shore said most of the payments handled by Transpay are done within a day, and that they never take longer than 48 hours.
Perhaps the main challenge for payment processors serving the freelance and gig economy remains staying “relevant,” Shore said. After all, that economy is changing significantly as it grows. The PYMNTS Gig Economy Index, for example, recently found that not only does about 40 percent of the American workforce now make at least 40 percent of their income via gig work, but that type of work is expanding. It’s not just Uber and Lyft — gig workers are hairdressers, makeup artists, tutors and independent contractors in all sectors.
For the markets served by Workana, which Bracciaforte said has more than 1.3 million registered freelancers (with around 100,000 of them active on a monthly basis), demand is growing for “anything related to programming and development,” he said. That includes data science, digital marketing and social media operations.
The global freelance and gig economy is certainly due for significant growth, Shore said, and that includes the United States, where looming visa restrictions could increase demand for temporary technology workers.
“The ecosystem will grow at double digits,” he said. “It’s only going to get bigger and faster.”
And, it seems certain, that many of the workers in that ecosystem will want to send their money home.