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Are Faster Payments Transforming The Caregiving Industry?

Can faster payment tools put on demand caregivers on the same economic footing as full-time workers? Bryan O’Malley, Care.com’s VP of payments, talks with PYMNTS about how faster payments are transforming the market by offering caregivers of children, the elderly, pets and homes, among others, access to benefits like health care and tuition.

By PYMNTS

Advancements in faster payments could give workers in the caregiving sector – including nannies, babysitters, pet and house sitters, and others – a professional upgrade.

There are several reasons that a family might need to hire a caregiver. For families with children, a caregiver can provide the services of a nanny or babysitter to supervise the kids. In other situations, a caregiver’s services can be enlisted by a family with an older relative who needs assistance. Others might need a caregiver to water their plants or pet sit while they’re away.

Whatever the reason for needing a caregiver, there are plenty of caretakers who still rely on cash payments for their services. This arrangement can create hassles for both parties with bank or ATM visits for cash or deposits.

While this arrangement can add a level of frustration for both parties, new real-time payment tools are promising to upend the old patterns of how caregivers get paid for their services. To elaborate on how real-time payment tools are not only helping caregivers get faster access to their money, but also giving them access to more benefits, PYMNTS caught up with Bryan O’Malley, general manager and vice president of payments for Care.com, an online marketplace that helps connects caregivers with clients seeking services.

Adventures in babysitting payment solutions

O’Malley points out that there are both millions of families seeking a caregiver’s services and millions of caregivers around the world who are looking for employment. Care.com, a Waltham, Mass.–based caregiving network, provides a marketplace for both parties to connect. According to figures provided by the company, there are over 24 million members in the company’s database (both caregivers and families) with membership spanning across 20 countries.

He also points out that many babysitters, nannies and other caregiving workers are part of the growing gig economy and do not have a direct deposit system in place with their employers that allows them to get their hands on their payments instantly. But faster payment tools are changing the way these gig workers get their money by offering them modern payment tools that provides immediate access.

To address delays in exchanging money for caregiving services, Care.com enables its caretakers to get paid using Stripe’s Instant Payouts feature, a service powered by Visa Direct and Mastercard Send. O’Malley said the feature removes the burden of cash payments for both parties by allowing payments to be processed using the Care.com platform, either online or using a mobile app. Caregivers can also have their payments delivered directly to their bank accounts using ACH with Care.com’s HomePay service.

O’Malley said the reaction to the faster payment options has been positive from both sides.

“For the family, they don’t need to worry about having the cash on hand,” he said. “They can easily link up their credit card and make the payment through their mobile device or on the web.”

On the caregiver side, workers still get paid for their work at the end of their shift. But the solution can remove the inconvenience of carrying cash around or having to deposit a check.

“For the caregiver, we have heard they appreciate having an option now where they can receive their payment without having to take cash and go to deposit it at a bank,” said O’Malley. “It can go straight into their account through their debit card, and they still have the confidence that they’re going to have that cash available straight away.”

At the end of the day, faster payment tools are offering more speed, convenience and modernization to the caregiving market. O’Malley said the company is “very pleased” with how these tools are changing old patterns of caregiver-employer relationships. Care.com considers its real-time payment tools an important offering that allows families to make payments to their caregivers quickly. And, as the thinking goes, because caregivers can get paid quickly and conveniently, they are more likely to want to keep working with the family who used a real-time payment solution.

A road map to professionalization

But offering caretakers a faster way to get paid is not the only service that real-time payments is providing, O’Malley said. By shifting away from cash-based transactions, the solutions are changing the relationships between clients and caregivers and putting the caregiving market on a path to modernization.

The most recent PYMNTS Gig Economy Index™ found almost half of respondents (47 percent) said they received 40 percent or more of their income from gig economy work. O’Malley pointed out that many caregivers belong to the gig economy, and many work more than one job. Offering real-time payment solutions provides gig workers with a stronger set of tools to manage their financial lives.

“Caregivers who are managing job to job, instead of taking in cash every time they do work, can get electronic payments sent straight into their bank accounts,” O’Malley said. “We think that is one way it professionalizes the relationship overall.”

In addition to providing caretakers with real-time payment options, services like Care.com are also offering additional services that are helping to professionalize the market. Last year, Care.com launched its P2P benefits platform, called Care.com Benefits. The program aims to further professionalize the market by helping caregiving workers get easier access to benefits that are common at traditional full-time jobs and allows families who rely on caregivers to offer these workers an additional allowance for their services.

O’Malley said the benefits program helps alleviate some of the worry about paying for things like health and dental care and allows families who are willing and interested in helping their caregivers a way to provide additional benefits on top of their salary.

“We heard from our caregivers that a large segment of the gig worker population work from job to job and don’t have a set of benefits that individuals who work for companies would be able to take advantage of,” O’Malley said.

Whenever a family pays a caregiver through Care.com, a portion of the transaction goes into the Care Benefits program. The caregiver can build up these contributions from the various clients they work for to receive Care Benefit Bucks and use the accrued Benefit Bucks to pay for health care, dentist visits, transportation, prescriptions and education costs. The company allows caregivers to earn up to $500 per year in Care Benefit Bucks that can be redeemed as a reloadable prepaid card.

Offering these perks to caregivers helps level the playing field somewhat by offering them the chance to enjoy benefits to which many other professional workers already have access, O’Malley said. In addition, it further modernizes the caregiving market and changes the nature of the caregiver-client relationship.

“It helps the family contribute to the benefit of caregivers and is another step to professionalizing the industry,” he said.

But O’Malley said he believes, in the long run, that the biggest payoff could be for the broader caregiver market. Introducing more professional tools to the platform — like real-time payments and easier access to benefits — he hopes, will help encourage more workers to pursue caretaking careers.

“My hope is that faster payments will transform the way families interact with their caregivers and that it will be a key lever in professionalizing the industry and attracting more caregivers to the profession,” O’Malley said.

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About the Tracker 

The PYMNTS Faster Payments Tracker™, powered by NACHA, is your go-to resource for staying up-to-date on a month-by-month basis. The Tracker highlights the contribution of different stakeholders.

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