#Payments31 Aug

The Rise of Gig Economy and Challenges of Mass Payouts

Alisa Tkach

Nothing boosts productivity like getting paid on time.

Nothing boosts productivity like getting paid on time.

Shaken by the events of the past couple of years, the payment industry has gone through several significant changes. Physical banking has given ground to digital banking: removed ATMs, closed physical branches alongside reduced cash usage speaks volumes about the current situation. Electronic transactions are rising like never before, and so are cross-border payments, with corporate payments accounting for the largest portion of the total value.

However, the cross-border payment scene is still far from being flawless. Take, for example, the gig economy – by 2023, the industry expects to welcome 83 million workers. In the modern reality, where this new type of employment is steadily taking over nearly every sector from holiday rentals to all kinds of professional services, the need for fast, preferably instant, transparent, and straightforward mass payouts solutions is of great relevance. 

Gig Economy: Obstacles and Solutions

The cost of international money transfers is high. In some cases, companies prefer to postpone the pay-day, collecting several payments and making a single payout monthly. However, in a highly competitive environment, this strategy comes out as a deeply flawed one. 

According to the research, 70% of gig workers would be more loyal to their gig work employees if offered same-day pay. The reality is pretty obvious: people are ready to be more efficient if they get their wages faster, especially during uncertain pandemic times. 

Gig platforms like Airbnb, Etsy, and others do not always ‘spoil’ their employees with same-day wages. For some, it might come as a Catch-22: imagine a taxi driver that cannot afford to pay the gas fee, as they are paid after a certain amount of rides they’ve taken. 

International gig workers also encounter another major issue: cross-platform money transfers also take time and can be extremely inconvenient and expensive. If the platform pays you using your PayPal account, not only will you have to pay a handsome withdrawal fee but also wait several days for the funds to reach your bank account. 

Now, is there a simple solution? 

Cryptocurrency settlements can come as a much-needed opportunity to satisfy all the gig economy participants. The platforms would cut the costs of cross-border money transfers and get an easy and convenient way to execute mass payouts, while freelancers can receive their rewards in time using their local payment providers.

However, considering the uncertain regulatory framework and still existing prejudice towards cryptocurrencies, companies cannot just start operating with crypto as they please. Businesses wishing to handle crypto-powered transactions would have to meet a long list of requirements, obtain licenses, set up AML/KYC processes, and still deal with high fees. At the same time, an average customer is not ready to decipher creating a cryptocurrency wallet and figuring out how to exchange it to fiat. 

Mass Payouts: Existing Solutions

Today, a few platforms work on improving the speed and cost of gig economy payments. MasterCard, for example, launched Mastercard Send designed for marketplaces looking for a way to instantly disburse freelancer’s wages to a bank account via a card or a digital wallet through one connection. 

Fintech company Rapyd has a global gig economy service that provides locally preferred payment acceptance methods. And then there is Circle, famous in the crypto circles. Circle designed a solution that enables sending mass payouts via API through multiple rails using USDC, bank wires, or ACH transfers. 

Mass Payouts2

Mercuryo is also about to launch Gig Solution for gig economy platforms that want to send cheap and instant mass payouts, cutting through the red tape.

Mercuryo product will work with two types of wallets: platform wallet and freelancer wallet. 

  • Platform Wallet represents a primary account operated by a gig platform for handling all its reconciliations, settlements, collections, and disbursements.
  • Freelancer Wallet is a ‘preliminary’ crypto wallet used by a platform user (freelancer). The wallet is linked to the primary account of the customer. 

This way, gig platforms can send instant, low-fee mass payouts in cryptocurrency that will end up in users’ wallets. Freelancers can work with the funds according to their preferences: transfer money to a bank account or credit card, send it to another crypto wallet or even link their wallet to a pre-paid crypto card and use it to pay for goods and services. Crypto to fiat conversation will be processed by Mercuryo automatically. 

The Bottom Line

The gig economy is blossoming: since average wages and the number of workers are increasing, the industry’s value is also increasing and is expected to be worth 347 billion dollars in 2021. Quick, inexpensive, and straightforward money transfers between gig platforms and freelancers will contribute to faster growth. Cryptocurrency tech could become the missing interlink that will improve the efficiency of mass payouts, enable instant, same-day payments, and bring stability in the settlements process. 

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