Independent workers experience a greater degree of unpredictability than traditional employees due to the nature of gig economy jobs, making predictability in areas such as payment frequency all the more important.
Especially among in-demand contractors and consultants, the ability to be selective about the jobs they accept makes them unlikely to maintain relationships with employers that do not align with their needs for predictable and on-demand pay, according to the “Expanding Payments Choice Playbook,” a PYMNTS and Onbe collaboration.
Get the report: Expanding Payments Choice Playbook
In fact, payment choice is driving gig workers’ employment decisions, and unpredictable payments are one of the leading reasons independent workers switch employers.
Coping with Complexity
Employers that take on independent workers may not always be prepared for the complexity of ensuring there are no delays or unexpected problems related to timely payment.
Gig workers may not even be in the same country, let alone the same city as an employer. When geographic separation and even cross-border transactions are added to the payroll equation, legacy payment rails can introduce delays of days or even weeks.
Even automated clearing house (ACH) payments can lack timeliness when dealing with the intricacies of paying gig workers. Transaction fees and currency conversion can also whittle down pay for gig workers abroad.
Workers of all types are increasingly interested in on-demand payments or other digital payroll approaches that make wages more readily available.
Providing Choice, Reaping Benefits
Employers that are providing choices are reaping benefits, Onbe Chief Financial Officer Brian Levin told PYMNTS in June.
Read more: Real-Time Payouts Help Gig Platforms Sidestep The Great Resignation
“One of the things that real-time payments and payment tools and choice specifically help with is not only giving [workers] off-cycle pay, giving them access to that pay faster, but also becoming more loyal to that provider,” Levin said. “Now they get not only access to their wages faster, different modalities with choice, and also a cheaper solution, more secure solution, and a faster receipt of that money. That provides some loyalty back to the corporate sponsor.”
Improving Payroll Workflows
Gig workers now expect real-time payment options due to the increasing availability of accurate, transparent and expedited payment options, PYMNTS research found. Among companies that commonly employ gig workers, such as Uber, Lyft and Postmates, third-party offerings such as immediate transfers to bank accounts via personal debit card can enable on-demand payments to gig workers.
Employers can also improve their payroll workflows by adopting a more frequent or adaptable payroll program for gig workers. Currently, many companies pay freelancers in a way that places them outside the employer’s standard payroll workflow, adding inefficiencies to the process. As gig work becomes a more common employment solution, maintaining two payment systems can become increasingly unwieldy.
Companies that instead accelerate their digital transformation, shift how they handle independent worker payroll and offer more flexible payments will have a clear recruitment advantage — especially when seeking independent workers in in-demand fields.
For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More