Cross Border Commerce

The Gig Economy Goes X-Border

What’s so hard about paying contract workers who work cross-border in a variety of far-flung locales and who want to be paid in the currency easiest for them to use in their home countries?

Nothing, if those workers don’t mind wondering when their paycheck will arrive and if their earnings will be expensive to access.

Hyperwallet says the root of this problem is technology  that hasn’t kept pace with the changing workforce – and their needs. That makes global payments to these “gig” workers costly and time consuming, and less than ideal in terms of transparency, thanks to rather archaic processes in place. As a result, the employer relies on payment methods that are decades old, including wire transfers and paper checks, which is a head-scratcher given the fact that ACH isn’t interoperable worldwide.

The end result as transactions increase but hoary methods persist?  Bottlenecks.

But there’s a path, Hyperwallet contends. A path that they have mapped out in five easy steps and say is on its way. By the end of 2017, these five trends will be realized — one way or the other. But by whom, remains to be seen.

1) The Need For Speed  

With the continued ascent of digital transactions changing the very nature of payments and interactions between firms and customers, banks are learning that they have to change the way they embrace digital payments. They know this which is why they’ve spent $20 billion on financial technology solutions in 2015 alone, up 66 percent from the year before.  The consumer conducting payments on a cross-border stage is one who will expect transactions that are done on an intuitive, easy to navigate initiation and confirmation of activity, on a consistent and constantly available basis.  Security and transparency are top of mind as well.  The ultimate trend here is the need, and emergence of, integrated systems across a “network of networks” and finance professionals want a single, simple solution.

2) The Need For Networks

Both B2B and B2C disbursements are dominated by checks but are headed toward a formation of networks that will adapt constantly, along with tech innovation and new requirements across mobile money and credit cards and other payment methods.  That’s at odds with the current international transaction model, where low value and high volume activity – think freelancers and commission based salespeople operating across territories — have increasingly dominated the payments landscape, whereas infrastructure has been designed to support high value, lower volume movement.

3) The Need To Recognize That Not All Workers Are Banked

Financial firms must also set sights beyond the traditional disbursement areas to look at the 2.8 billion unbanked and underbanked people in the world, with concentration in developing nations.  The impetus here is to link financial infrastructure with financial innovation.  In emerging markets, said the firm, payees deal primarily in cash but as options expand they will expect to be able to take advantage of those options.

4) The Need To Partner  

Politics may make strange bedfellow, but do, to many banks and FinTech. Banks shouldn’t be viewed as adversaries, said Hyperwallet, but as part of the solution for payments advances, while conversely banks must be open to new partnerships, including linking up with digital partnerships.

5) The Need To Be Clear

Data must take center stage as finance professionals must use platforms and other management tools at their disposal to navigate and track payments globally and in real time.

Though Hyperwallet’s crystal ball may be short term in nature, the trends mentioned, and the needs identified, are certainly looking at longer runways — stretching out years if not decades, as a modernized workforce meets a modern global payments infrastructure.

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