How Leveraging Mobile Can Support Financial Inclusion for Gig Workers

Adjusting how gig workers are paid helps on-demand platforms promote financial health

Mobile phone ownership has continued to grow across the United States. According to recent research from Pew Research Center, the share of Americans that own a smartphone is now 85%, up from just 35% since 2011. This increased dependency on smartphones changes the way brands interact with and market to consumers, but this shift doesn’t only impact consumers. We must also consider that a growing segment of our economy relies on mobile for work – our gig workers.

The gig economy is growing as an essential segment of the workforce, and it’s growing quickly. It has been reported that gig workers could make up half the workforce by 2023, as the COVID-19 pandemic has led to an increased interest (or need) to control how, when and where we work. As an example, the pandemic created a surge in demand for delivery as consumers stayed home and turned to online and mobile services to meet their essential needs including restaurant, grocery and pharmaceutical delivery; transportation for other essential workers; and more. But, while these services are recognized as essential, the financial health of these gig workers is not (but should be). As gig economy platforms and employers look to stand out in this rush to shape the post-COVID workforce, they must focus on empowering a financially healthy and included workforce.

During the last 18 months, the payments industry has seen a mass adoption of digital banking and contactless transactions via mobile, but payments to gig workers is lagging.

Facilitating payments to our essential gig workers, a segment that relies on their income to run their businesses, remains slow and outdated. Gig workers, especially in the transportation industry, incur a high cost for the nature of their work. Fuel, maintenance, depreciation and insurance are just some of the costs that must be incurred before they can even go to work.

Fintech solutions, such as Payfare, can power instant worker payouts for gig platforms and marketplaces while delivering financial freedom and peace of mind. The top reasons for leveraging mobile to support financial inclusion in the gig economy include:

In America, 78% of workers live paycheck to paycheck and nearly half cannot cover a $400 unexpected expense. Slow payments could lead some gig workers to platforms that offer instant payout options with a fee attached, or to payday loans. Many payday or predatory lenders charge steep fees, such as $10 to $30 for every $100 borrowed, and often leave borrowers deeper in the debt cycle. To counter this issue, Payfare is trusted by some of the world’s largest gig platforms – Lyft, Doordash and Uber – so that drivers can have have immediate access to their funds and banking services in-app.

• Workers choose to get into the gig economy for a multitude of reasons, often including flexibility, independence and control. Having a versatile payout solution pairs well with this style of work, unlike traditional banking. Through full-service digital banking apps and payment cards, gig workers benefit from instant access to their earnings and cash back rewards on everyday purchases.
• Worker financial stress costs companies over $5,000 annually per worker in lost productivity. While on-demand payment will help ensure a low gas tank, flat tire or other unexpected expense doesn’t derail a gig worker or make it challenging to do their job, it also encourages workers to work more. In fact, research shows 85% of gig workers would work more if they were paid faster. On-demand pay enables gig workers to earn more, and even be offered relevant cashback rewards on everyday expenses such as gas, vehicle repairs, food and more with Payfare’s solution.
  

As the consumer preference for digital payments becomes more permanent and the gig economy continues to grow, financial inclusion must be table stakes. To put it simply, everyone deserves to have the means to transact and to be a part of this digital economy. We believe gig workers are entrepreneurs and, as such, want to provide solutions to help them grow their business. It’s also why Payfare has recently partnered with Marqeta, the global modern card issuing platform, to accelerate the expansion of our platform across North America, Europe, Asia Pacific and beyond.

The Marqeta-Payfare partnership will combine Payfare’s full-service digital banking apps and modern UI with Marqeta’s card issuing and payment processing capabilities, offered through its modern, open-API platform. It comes at an opportune time as workers around the world are considering contract work in increasing numbers, attracted by the faster pay, flexibility and control that comes with the gig economy.

With mobile use not slowing, we must take the time to adjust or create solutions that fit best with gig workers’ needs and in turn, support financial inclusion through the payment methods they prefer. To learn more about Payfare’s mobile solution, visit https://corp.payfare.com/.