Global payments is seeing blurred lines between parties – whether B2B or B2C or P2P. But one audience that may be quietly making inroads into a veritable sea change in the way we live and work globally may also herald a sea change in payments — and that’s freelancers spanning the range of Web developers to writers and even to modern sole proprietors such as Airbnb hosts and Uber drivers.
In one study, limited solely to the United States, conducted late last year by Edelman Berland, as many as 54 million Americans have taken on at least some freelance work, with that shaking out to be about one in three workers.
The “gig economy” as it is colloquially known, has a number of hallmarks, chief among them the ability for workers to sell their services and goods globally, in essence contributing to an “always on” marketplace where demand for services can span nations. Location may not mean much anymore – in terms of getting the work done as marketplaces like Upwork, Fiverr and Freelancer.com connect employers and freelancers around the world – but it does indeed matter when it comes to getting paid, especially in a cross-border environment.
In an interview with PYMNTS, Nagarajan Rao, Head of Product, Transpay, a cross-border payments platform, said that the “freelancing economy is emerging from its nascent stage, with year-over-year growth continuing to climb.” The market size up to five years ago, according to Rao, was about $1 billion globally, with a significant CAGR that has brought current levels to as much as $5 billion globally, with $1 billion happening overseas alone.
Breaking that down a bit, continued Rao, roughly 30 percent of that tally comes from the U.S., with the rest, of course, being international. Within that 70 percent, the top markets, according to Rao, include India, the Philippines, Bangladesh, the United Kingdom and Europe at large. Some of those markets, such as parts of Eastern Europe and parts of Asia, as defined by freelance and outsourced workers, “were not here three to four years ago.” Now, in many of those regions, Transpay helps support organizations as sizable as Google, and as small as micro task companies. Freelancing, Rao reminded PYMNTS, “is not just the website designer in India – here it can be the freelance Airbnb host and the freelancers who sell their photos on Shutterstock” and perhaps provide other services.
But with so many far-flung operations and operators, said Rao, “satisfying payments to freelancers in the ever increasing global services marketplace can present several challenges.”
License requirements and regulations on money movement vary from country to country and current, widespread forms of payments do not universally satisfy those often rigorous demands. “For example, sending payments to capital control countries such as Nigeria, Pakistan and Brazil creates roadblocks for enterprises sending funds in and out of these markets.”
And on the receivers' side, current payment options can come at a premium. International debit cards are not the best way to carry value globally, said Rao, with the hidden costs and foreign exchange rates, and then the fact that freelancers have to pay 30 percent to the marketplace itself. For a freelancer in India, for example, the use of a transfer bank can mean that payment is not received for four to 7 days. PayPal, added Rao, has restrictions on local accounts. And prepaid cards, if used in emerging markets, can prove useless if there is a dearth of equipment to process them.
“The only truly universal payment option is banks, as they are present in every country and remain a linchpin for freelancers and their daily lives. As such, Transpay works with banks to streamline the payout process to match the speed of the digital freelance economy.”
Transpay, by way of contrast, allows for direct deposits to be done in local currencies, with the fact that, as Rao put it, his company works with “thousands of banks in top freelance centric markets, such as Southeast Asia, Africa, Latin America and Europe.” Additional banking partners are likely to come on board in 2016 and beyond, with ventures to be done jointly over the next three to five years in the more than 100 markets the company currently serves.