According to the data, 35.9 percent of workers participate in the gig economy, and about two-thirds source their gigs via digital marketplaces. Gig workers skew younger, though an increasing proportion are between the ages of 35 and 44. In addition, gig work still remains a form of supplemental income, as opposed to a main source, for the majority of workers — as 54.1 percent reported still having a full-time job.
However, there were a few statistics that were a bit surprising. For example, nearly one-third of gig workers still report cash as their favored payment method. Furthermore, 22 percent are interested in joining the gig economy, but are unsure quite how to do so, and 25 percent expressed uncertainty about what the gig economy is at all.
“Awareness is still a big issue,” Hyperwallet SVP of Digital Markets Michael Ting told Karen Webster as the two discussed the results of the Index. “What we are seeing is that there are 50 million workers that could be added to the pool, and I think there is a lot of thought that has to go into how we can pick that awareness up.”
Some of it, he noted, will be a matter of circumstances. Things like large-scale government shutdowns, for example, tend to leave people looking for ways to earn income in the short term, which makes them primed to learn all about the gig economy. The proliferation of vertical-specific marketplaces tapping into an increasing array of professional categories will further widen the net.
Beyond circumstances, powering the gig economy for marketplaces going forward will be a story of payments — and making them flow instantly and intuitively to the right place for the worker that is receiving them.
Marrying Receiving Money To Using Money
While other payment methods have risen and fallen, cash has managed to hold on for one simple reason: It’s easy to receive and easy — and instant— to spend.
That tight connection between receiving and utilizing funds, Ting told Webster, is a huge driver of payment choice for gig workers, though a concept that has been easily overlooked. He said that many digital marketplaces that matched gig worker supply with demand were focused on how buyers could easily pay, not so much on how receivers could easily receive payment and spend it.
That, he said, is changing.
“Increasingly, from a payout perspective, the question is not only how to give these [workers work], but how to give them [the] ability to receive the money and use it,” Ting explained.
Gig workers, he noted, don’t want to wait for their funds. They also, fundamentally, don’t want to spend additional time moving money from one account to another so they can use their funds. It’s why nearly 40 percent of gig workers like to be paid via PayPal — the funds can be moved into their accounts instantly, and can be used instantly to buy things, pay bills or transfer to someone else.
“Getting money instantly has value, and being able to turn around and use that money the [same] way you can use cash in real-world commerce is a powerful offering,” he said.
It’s also why bank and ACH systems around the world are pushing for faster and real-time payments, and why the card networks are revving up their efforts to use debit cards and their rails as a proxy to push instant funds to consumer bank accounts.
Moreover, as gig work continues to grow, and as workers start taking in more of their income from gigs, their preferences for faster payments within that sphere are only going to become more pointed. As consumers start bringing in more income by these methods, Ting said, the utility of the endpoint from which they take payments — and how easily and quickly they can work with that money — is only going to become more primary.
That means it is becoming more important by the day for the marketplaces looking to attract gig workers to optimize their payment processes. Increasing the speed of usable funds, he noted, is only the first step.
Curating Faster Payments
To say payments are a key competence point for marketplaces in the gig economy is a huge understatement. Payments “are a primary pillar of value,” Ting said, mostly because, without them, a marketplace isn’t going to last long. Sellers and service providers are there to make money. If they can’t do that easily on one marketplace, they will go to one where they can.
What marketplaces have done well, so far, is create the instant gratification of finding the job or gig — and being able to obtain it in a “high-velocity way.”
“That instant gratification needs to be matched with the instant payment gratification immediately after the job is complete,” Ting said. “That is the battleground that is expanding as marketplaces become more competitive and [chase] the same pool of workers. Each of them have to figure out a way to add value to those individuals, and become the preferred destination to come to look for work.”
That instant payment solution — or set of solutions — is the starting point. When marketplaces are in the early phases of optimizing the payment experience for their workers, it makes sense to go big with lots of methods and offerings so their workers will most likely see the method they want.
However, more isn’t always better — and the lesson eCommerce can provide about offering too many choices around payments is the risk Webster called “Nascar-izing the checkout.” Just as having to wade through 1,000 buy buttons doesn’t help a shopper, 1,000 payment options aren’t what a gig worker needs or wants. The next phase of marketplaces must find a way to offer a more curated approach so that what they offer their workers is the most natural choice or two for their payout.
While we tend to think of merchandising as something that mostly happens in a retail context, it is increasingly something that marketplaces (looking to connect people to work) need to think about. Ten years ago, Ting noted, eCommerce websites were pretty static and uninteresting. Today, an awful lot of data and sweat equity go into personalizing those offerings — and merchandising them to capture digital customers.
The same is true for marketplaces, he noted, which need to “merchandise themselves to individuals” so that the experience feels customizable to the worker, because of the options — around scheduling and payments — that are open to them.
“We should never forget, a lot of these gig workers, who evolve to the point where [gigs are a] sole source of income, say the number-one reason they are attracted to this type of work is flexibility and the fact [that] they are in control. The marketplaces that provide for that the best will attract those workers,” Ting said.