The Growing Gig-Economy Spurs Demand for Online Payment and Banking Services

Written by Clive Reffell

The growing gig-economy spurs demand for online payment and banking services

With young people finding it increasingly hard to find quality and meaningful work, more and more are turning to the gig-economy. Although this form of work can be unpredictable, stressful and at times downright precarious, and offers no traditional employee benefits such as being paid while on vacation or ill, nearly half of US Generation Z workers (46 % of those born between 1997 and 2000) are freelancers. This trend has created demand for different types of banking and financial services, a new market opportunity.

A big difference in attitude between Gen Z-ers and other generations is that they are the first digital The growing gig-economy spurs demand for online payment and banking servicesnatives. The first iPhone was launched before they were teenagers, and having grown up using the digital technology that was all around them, it makes sense they increasingly adopt that tech to make work more flexible. “As Gen Z enters the workforce, they’re increasingly choosing non-traditional ways of working that are better suited to their desired lifestyle than a traditional 9-to-5 job is,” said Stephane Kasriel, CEO of freelance work platform Upwork.

An important financial service for these gig-economy workers, and the firms that go to them, is the Global Accounts Payable Software Market. Tipalti is a California-based example of an automated payments company. The digital economy is by far their strongest product-market fit, CMO Rob Israch told us. “The digital economy is essentially the new partner network-centric and online-focused companies that have developed over the past 10 or so years. Think Ad Tech (like Outbrain), Online Services (like Amazon Twitch), and Online Marketplaces and Crowdsourcing (like Uber, Houzz, Seeking Alpha, etc). These companies care deeply about attracting and retaining their freelancers, publishers, talent, and partners and they know the payment experience is a crucial touchpoint for these partners.”

CSW and Shareable partnered with Tipalti last year to help recruit respondents for research based on a sample of over 200 global freelancers. It showed that while freelancers try to strike the right balance between autonomy and security, the biggest reason for changing ‘employers’ is late payment or the use of inflexible systems. Excessive fees for cross-border payments are a particular irritant. Almost 75% of the sample said they would leave a marketplace because of a payment issue.

Our recent three-part article on prize challenges explains how the gig-economy provides numerous benefits to employers, notably that they can dip in to a pool of expertise in virtually any professional discipline whenever they want, perhaps through sponsoring prize challenges to inspire open innovation. They have access to the talent whenever they want it, without the burden of paying full-time salaries. This is why a reliable and smooth working payment system is so important to companies who want to reduce churn and retain access to reliable freelancers who already understand their business and ethos.

The incentives of the gig-economy to freelancers, including open innovation prize challenges, include the potential to lead a flexible lifestyle with a high degree of mobility. For many, experiences are a higher priority than the acquisition of possessions, and the knowledge that they can base themselves anywhere that has internet access is very appealing. The GoGoPlaces platform is one that enables people to do precisely this. Though while freelancers are perhaps quite regularly changing landlords as “digital nomads” they need the reassurance that payments will arrive on time, in the correct currency, and without the deduction of excessive fees.

At the same time as the gig-economy grows in size, and other innovations disrupt traditional markets, there are more opportunities for the automated payments providers. In May Tipalti announced new financial management partnerships to help further modernize organizations’ finance operations, giving them the necessary tools to focus more on the strategic challenges they face during rapid growth. New channel partners include Big Bang ERP, an independent consulting firm focused on cloud business applications, Procurify, a spend management platform, and Tesorio, a cash flow performance platform.

The gig-economy will continue to grow. At a macro level it has already reached a critical mass where western governments including the UK are having to re-determine their definitions of employees and self-employment, adjust personal tax systems, and examine qualification for and distribution of benefits payments.

At a micro level more individuals are effectively taking direct personal control of their career paths back from the hands of employers, and integrating it with a more flexible lifestyle than their parents’ generation was ever able to consider. They provide a vast and valuable resource to businesses of any description, who have to bear in mind that payments to ‘their crowd’ cannot be an afterthought. It’s an essential element of creating a healthy, active, growing freelancer marketplace.

Are you a ‘digital nomad’ in the gig-economy with some experiences to share with the CSW community?


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About Author

About Author

Clive Reffell

Clive has worked with Crowdsourcing Week on sourcing and creating content since May 2016. With knowledge and experience gained in a 30+ year marketing career based in London, UK, he operates as an independent crowdfunding advisor helping SMEs and startups to run successful crowdfunding projects, and with wider social media and content marketing issues.

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