Gig Economy

ADP’s Wisely Pay Bids To Smarten And Speed Up Gig Economy Payments

Can a shift in demographics lead to ripple effects – and maybe even a sea change – in the way gig economy workers get paid?

The PYMNTS Gig Economy Index has estimated that gig workers account for 3.7 percent of GDP, worth roughly $711 million in income in 2017.

Right alongside those tallies, payroll cards are gaining traction, having accounted for six million cards at the end of last year and expected to grow to as many as eight million cards in 2022, Aite Group reported.

The rise of the gig economy – and the embracing of payment cards – speaks to a desire of the project-based workforce to have flexibility in what they do, career-wise, and how they get paid.

As noted in a recent report commissioned by ADP, roughly half of Generation Z (47 percent) and about a third of millennials (at 31 percent) would turn down a job if unable to choose how money ends up in their pockets.

The same study found that 47 percent of millennials and 66 percent of those belonging to the Generation Z cohort have used preloaded payment cards within the past 12 months.

To that end, as of Monday (May 14), ADP has introduced Wisely Pay by ADP. The company has billed the service as a way for employers to tailor payments to the gig economy.

In an interview with Karen Webster, Mark Putman, general manager at ADP Payments, said that Wisely Pay builds off of Global Cash Card (acquired last year) and the ADP platform, working in tandem to offer funds to workers in flexible ways.

It is the “how and when” that makes for a loyal relationship between 1099 workers and the platforms and employers that employ them. Consider the fact that under the typical payment model, gig workers invoice their employers and then wait 30, 60 or even 90 days to get paid, as disbursements are tied to the procurement process.

For the individual on the receiving end of long wait times, said Putman, it’s hard to budget when you are subject to the vagaries of extended payout cycles.

In the gig economy and for younger workers, issues include, as Putman put it, “how do I get paid, how do I manage my taxes, what do I need to withhold?” These younger workers may be navigating a brave new world of sorts, as those aforementioned issues were “always taken care of in my parents’ and my grandparents’ generation.”

No longer is that the case – with freelancers, withholding and other activities (such as paying for healthcare and FICA) are up to them, not the employer. Putman said those workers in Generations Z, as well as millennials, could use a little assistance with earmarking of funds due to Uncle Sam and others. One might liken it to an envelope approach where funds are allocated to different “buckets,” which can help budget for goals like retirement and vacations.

In its release Monday morning, the company said that Wisely Pay by ADP is the first offering that gives administrative tools and support to employers across verticals, catering to full-time, part-time and freelance workers.

Putman noted that the average checking account fee is $40 a month and that the fee schedule for the new ADP offering is substantially lower (and, in addition, roughly 60 million Americans do not rely on traditional checking accounts to conduct their financial lives). Wisely Pay’s payment options extend across the digital payments platform built by Global Cash Card and ADP’s Instant Funding API.

In reference to flexibility, Wisely Pay offers its users several conduits through which they can receive, spend and manage money once they submit an invoice. Those options include peer-to-peer transfers, instant pay and digital wallets, such as the “pays” offered by Samsung and Apple.

Wisely Pay dovetails with ADP compliance solutions and an electronic payment program that is extant across 50 states. Writ large, consider Wisely Pay a banking alternative, said Putman, to be made available through the pay card beginning in September in the United States.

“Down the road, we are going to really embrace multiple pipes and ways to move this money around,” he told Webster.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.