The gig economy is thriving, but getting gig workers to sign up and stick with your platform can be a challenge. High churn can negatively affect the quality of work provided. This, in turn, makes it difficult to attract organizations that are looking to hire freelancers.
Real-time payments (RTPs) are one tactic gig marketplaces can use to attract and retain qualified contractors.
In this article, we’ll highlight the challenges that traditional payment systems pose in the gig economy as well as what RTPs are and why they’re essential for gig workers. We’ll also show you how immediate payments can help your gig marketplace grow.
The Problems with Current Payment Systems
The recent shifts towards remote-first work and the financial benefits that hiring gig workers can bring has led to a rise in the use of freelancers and independent contractors. In the US alone, the gig economy is valued at a whopping $350 billion.
With thousands of gig workers offering their services to entities around the world, it’s become essential for businesses to be able to pay global recipients quickly and easily.
However, payment systems haven’t quite been able to keep up with changing payment needs of their users. This has created a few challenges for those using the services of gig workers:
- Processing times: Exchange control regulations and authorization methods have meant that global payment processing has traditionally been slow.
- Exchange rate volatility: Currencies fluctuate constantly. When combined with payment delays, this can negatively affect gig workers earnings and cause churn.
- High fees: The fees that international payments attract increase costs for businesses and decrease the payout that gig workers receive.
- Fraud: The anonymity of gig workers and the platforms used to send and receive funds can make both businesses and contractors vulnerable to fraudulent activity.
What Are Real-Time Payments?
Real-time payments are instant remittances where funds are taken from one bank account and immediately transferred to another bank account.
These payments are supported by RTP networks (RTNs), which are online and active 24/7. The RTN essentially creates a link between two financial institutions so that payment information can flow between them without any delays.
In practice, this means that when a sender pays a recipient, the funds will leave their account and arrive in the recipient’s account almost instantaneously – no matter when that transaction is executed.
Pay.com is a full-service payment infrastructure that offers real-time payments. Our remittance services allow you to send funds to gig workers’ cards or bank accounts from one place with just a few clicks.
Why Are Real-Time Payments So Important for Gig Workers?
As we’ve already mentioned, the time that it takes for regular payments to be processed can have a big impact on gig workers’ earning potential.
Currency fluctuations mean that long delays between invoicing and receiving payments can negatively affect contractors’ income. Hidden fees that come with traditional SWIFT (Society for Worldwide Interbank Financial Telecommunications) transfers can also eat into their earnings.
With approximately 55% of gig workers living paycheck to paycheck, timely payments are essential for ensuring that they’re able to manage their finances effectively.
Immediate payments reduce the burden of tracking payments for contractors, give them instant access to their money, and minimize the administrative work required to follow up on late payments.
Real-time payments help to reduce gig workers’ money-related stress while increasing the likelihood that they’ll want to offer their services to your business for the long term.
How Can Real-Time Payments Help You Grow Your Gig Marketplace
It’s clear that RTPs bring major benefits for gig workers and the businesses that use their services. Here are a few ways that offering instant payments on your gig marketplace can help you to grow your business:
Provide Predictable Payouts
Quick transfer times reduce the effects of exchange rate fluctuations and attract far fewer fees than traditional SWIFT payments. Both of these factors mean that gig workers will receive a larger portion of the funds they’ve invoiced for – and be more inclined to work with you again.
Create a Competitive Advantage
Gig workers want to be paid faster. Having immediate access to funds allows them to grow their own business. By offering RTPs on your platform, you enable contractors to expand their enterprise, which is a major competitive advantage you’ll have over other gig marketplaces.
Churn is one of the biggest challenges for any gig marketplace focused on growth. There’s a lot that goes into reducing contractor turnover and encouraging loyalty, but speedy payments are a major factor. Offering efficient, predictable payments will help you minimize churn.
Why Choose Pay.com as Your Payment Service Provider?
Pay.com offers businesses fast, efficient remittance services with plenty of benefits for gig marketplaces, including:
- Quick onboarding to ensure that you can start sending funds almost immediately
- Payment tokenization to protect your financial information while it’s in transit
- Level 1 PCI DSS compliance (the highest degree) for completely secure transactions
- An advanced API that allows you to integrate our platform into your existing website or application and add or remove elements to suit your business
- A single provider for immediate, low-cost payments to 170 countries
The Bottom Line
Real-time payments are essential for gig marketplaces that want to attract talent from across the globe and keep contractors on board for the long term.
To bring more freelancers to your platform, reduce churn, and pay them quickly, you need a scalable payment infrastructure that allows you to transfer money anywhere in the world and in any currency using a range of payment methods.
Pay.com enables businesses to execute global remittances with ease. Offering RTP-friendly payment methods, global payment processing, and a flexible system that can be customized to suit your business needs, our platform is the best choice for gig marketplaces looking to pay contractors.