Payment speeds can make or break gig workers’ interest in working for companies, especially for highly skilled ad hoc workers in competitive fields like software development and programming.
Gig workers in these categories are high earners: The average income for freelance web developers is just over $75,000. These individuals want to work for companies that can provide many of the same benefits full-time workers receive, and that includes faster access to payments, Teja Yenamandra, founder and CEO of Gun.io, a marketplace for ad hoc software engineers, said in a recent interview with PYMNTS.
Fast and easy access to payments has become essential to keeping gig workers engaged and satisfied, and it is therefore increasingly important for marketplaces facilitating these relationships to offer such solutions.
“Outstanding accounts receivable and collection problems [are] a big thing for freelancers. … We are really able to [remove the risk] for freelancers and then [lower] the chances of freelancers ghosting for clients, and that is a huge value add,” he said.
Providing that payment security and ease is one of the first steps businesses must take if they wish to attract and retain top talent, especially as workers’ needs continue to change during the COVID-19 pandemic. Companies that do not create personalized experiences for these individuals will likely find themselves scrambling for the expertise they need to complete projects.
Meeting Gig Workers’ Evolving Payment Needs
Freelancers have disparate payment needs, depending on their industries and what they are looking to gain. Freelance software engineers appreciate the flexibility of the work, but expect to be compensated appropriately. Those in these skilled fields typically earn more per hour than 70 percent of workers in the U.S., according to one 2019 study. The individuals on Gun.io’s marketplace are most often based in the U.S., Yenamandra said, though they do work globally.
“[Gun.io] freelancers are typically senior folks who have been programming for 10, 15 years and [who] really view themselves as individual proprietors of their trade [as] craftspeople,” he said.
These individuals want to quickly agree on a rate and get working, which means businesses must satisfy their expectations and preferences from the start. Ignoring the experience, expertise and income level of such freelancers can be a big mistake for companies, yet many firms fall victim to the error. Impacted freelancers then need to spend their time tracking down late payments, which has become more common during the pandemic.
“I still think a lot of [companies] looking [for freelancers] — those that do not have a mature business … who are looking to hire development help — still think of the world in that way,” Yenamandra said.
Gig marketplaces must then not only work toward helping ad hoc workers find job opportunities in general, but ones that meet their payment needs. That is something Gun.io has sought to address by enabling weekly payments access to freelancers through ACH. The platform is also looking to use machine learning (ML) to offer suggestions for rates freelancers could charge, Yenamandra said.
“Everybody, in their heads, has some notional value of what their work is worth based on what they think their rates are, and companies have some notional value of what they want to pay, but ultimately, the market decides what the market price is,” he explained. “Over time, as many businesses hire many developers [through Gun.io], we are really getting what market-clearing prices are for high-skilled labor.”
This tool will create suggestions for working rates, providing freelancers with the same information they may be used to receiving and negotiating with in terms of full-time salaries, he said. Gun.io plans to release this feature later in 2020, although the firm is keeping an eye on how developments related to the COVID-19 pandemic could impact the needs of freelancers, employers and the broader gig economy.
Preparing For COVID-19’s Aftermath
It is still difficult to tell how COVID-19 will affect ad hoc workers in the long run, but the ongoing pandemic is already having significant effects on gig workers. Many ad hoc workers are finding themselves either out of work or trying to collect late payments. This is leading gig workers to seek employment with businesses that can pay them quickly and ways that meet their preferences. This desire for faster and flexible payments is expected to grow in the pandemic’s aftermath. Freelancers in the U.S. are also seeing large-scale changes take place regarding the programs they can access for financial help, including sick pay programs and government financial initiatives.
Players in the gig economy space must also watch out for long-term trends. That includes the potential for the U.S. government to support digital wallets or digital dollars to disburse funds to citizens, which could have intriguing effects for freelancer payments as well, Yenamandra said.
“I think that is really interesting and I think that is a way to [potentially] lower transaction fees, such as the 2.9 percent processing fees on [card transactions],” he said. “I also think, for us over time, integrating digital currency could be interesting because of the minimal — basically zero — cost on the transaction fees.”
Cryptocurrencies or other digital currencies often come with valuation risk, he clarified, and so they do not make a suitable form of daily payment right now because their worth often changes. The fact that no fees are attached to making payments in digital currencies makes it intriguing for the future, however.
The idea of a digital dollar was originally included in the proposals for a recent U.S. COVID-19 relief act, but was taken out of subsequent versions of the bill. Digital dollars could add more speed to the payments experience for freelancers, who are more often expecting payments to accommodate their personal needs.
Companies will need to keep a close eye on such developments and on what freelancers are truly asking for when it comes to payments. Lasting relationships with freelancers depend on firms’ abilities to craft these personalized experiences. Making sure to offer what freelancers need will likely only grow more complicated after COVID-19, but marketplaces are preparing to rise to the challenge.