A gig worker in one country trying to get payment from a client in another country doesn’t sound difficult, until you actually try it. Cross-border payments and the gig economy intersect in more ways every day, and if international freelancers are keen on one topic, it’s getting paid.
That’s easier said than done, as banking regulations and foreign exchange rates often conspire to waylay checks and even ACH transfers, holding them up for days, leading to unpaid bills and the cascading negative effects of not getting paid on time (or paid what you were expecting).
Tapping into the expertise of payments processors to overcome these issues is at the center of the latest PYMNTS Gig Economy Tracker® done in collaboration with Tipalti, examining the eye-popping expansion of freelance ranks — and lingering issues around paying them properly.
“That is where a global payment processor can be more beneficial,” the report says. “They are able to centralize payment efforts, including how currency conversion works. Payment processors are able to secure better rates because they are executing transactions for all their clients and have a closer relationship with the banks. They also are better geared up to support global freelancers with compliance, technology, and a rich payment feature set.”
Currency Exchange and the Freelancer
An estimated 70 percent of freelancers worldwide are 35 years old or younger, and as such they came of age in a mobile world of PayPal and Venmo. This group pioneered peer-to-peer (P2P) payments. Unlike the post-recession freelancers of 10 years ago, who had no recourse but paper checks and interminable processing times (and wouldn’t dare make a fuss anyway), gig workers are starting to understand faster payments and ask for them by name.
This is true in cross-border situations as well, with more companies assembling distributed workforces and teams who may all be in remote locations with true no central HQ. The old ways of paying these folks simply aren’t flying anymore, as word of “instant money” spreads.
“Many companies have tackled cross-border payments over the years, but key friction points remain for both businesses and their freelance employees,” according to the March Gig Economy Tracker®. “Partnering with third-party providers equipped to handle cross-border payments is one viable solution as these organizations can mitigate potential payment process hiccups, including foreign exchange concerns and payment speeds. Third parties are also better able to educate businesses and gig workers about the costs involved in sending payments via wire transfers, physical checks or other methods because many utilize automated software that tracks shifting foreign exchange rates and other facets that impact currency exchanges.”
Platform Partners Making It Work
Payments platforms are the closest thing to a magic bullet at present for cross-border payments to freelancers, but it’s still not a perfect fit. The Gig Economy Tracker® notes that no company, technology or payment rail has taken all uncertainty (or funds loss) out of this transaction. But the top solutions are taking most of the frustration out of the process.
“Satisfying workers who want to be paid immediately is difficult, even when those individuals are in the same domestic market, and no company has yet to crack cross-border payments’ issues,” the report states. “Firms and PSPs will need to continue experimenting, though, as these workers — especially those who are on the younger side — are no longer accepting traditional excuses like international payments taking more time or that currency conversions are costly and difficult. Companies will thus need to find partners that can help them add speed and security to their international payments, particularly as freelancers keep searching for projects with businesses that can accommodate the new standards of global work.”