Three quarters of freelancers said they would leave their current marketplace due to payment dissatisfaction. That’s according to a recent survey by startup Tipalti, which collected responses from more than 200 freelancers working in gig, sharing and marketplace economies around the world.
Freelancer payment satisfaction bears a distinct correlation to loyalty, and with so many other options for these workers to pursue, marketplaces will want to make sure they’re delivering the best possible payments experience to avoid losing participants to other platforms.
Churn can damage and even destroy a marketplace network and product. Imagine Etsy without any artists or Lyft without any drivers. They would become non-companies.
But at the same time that marketplaces are striving to keep participants in their court, competitors are shelling out money to attract the same talent to their platform, making it absolutely critical to give freelancers what they want in terms of payments.
Tipalti CMO Rob Israch said communication is the top freelancer demand when it comes to online marketplace payments.
If there’s an issue with a payment — whether it’s on hold, not coming at all or ran into a compliance issue such as an OFAC hit — freelancers want to be notified. The demand for communication factored even more highly than demand for being paid on time, which was the second most in-demand payment practice. Being paid accurately came in third.
Israch said the survey also showed that freelancers like being able to track the status of their payments even when there isn’t an issue. Knowing when a payment has been approved, is “in flight” and has landed provides peace of mind that they will be compensated for their work.
“Marketplaces can’t just worry about demand and users,” said Israch. “They have to worry about having a good freelancer recruitment team and experience, because that drives retention or churn.”
The average freelancer is in three to four marketplaces simultaneously, Israch said. If one marketplace messes up the payment experience, those workers may leave the platform or give more hours to a competitor, he said.
Not offering the payment method choice freelancers want can be another deal-breaker, according to the survey. In the U.S., most workers want ACH payments, while PayPal is the second most popular means of payment. Elsewhere, those positions are reversed. But either way, there’s one thing freelancers definitely don’t want, and that’s wire transfers.
Israch said the best bet is to offer freelancers choices from a portfolio of options. Paying out via U.S. ACH, global ACH and PayPal is just the bare minimum, he said. Another key choice is allowing payments in workers’ local currency. Finally, marketplaces should note that many freelancers are looking to get paid earlier, even if it means paying a fee or taking a cut out of their earnings.
“Marketplaces have worked hard to build demand and freelancer networks to have a nice two-way marketplace offering,” said Israch. “They must address this long term, or it’ll undo their business.”