Originally published on PYMNTS
As noted in last week’s PYMNTS Gig Economy Index, 35 percent of today’s workforce participates in the gig economy, and that number could swell to as many as 50 percent over the next two years.
The gig economy has become a $1.4 trillion business by which participants can earn a little extra to help pay bills or save for special occasions like a vacation or a wedding. A small percentage even treats the gig life as a primary source of income.
That makes payouts of primary importance, says Bruce Parker, founder and CEO of the FinTech startup Modo.
Parker says the marketplace is recognizing that it needs to start thinking more deeply about payouts. Different players are coming to the same conclusion: that they must connect different payout solutions to satisfy gig workers’ myriad and widely varying demands, and that that task is far easier said than done. Integrations, in short, are hard.
According to Parker, there are two parts to this problem.
First, there’s the payout itself — pushing funds to a card or a bank account or mobile money account. There are plenty of good solutions out there, and not all workers will prefer the same one, so most clients will find themselves needing to support several options to keep the workforce happy, he said.
That creates a problem, because now the organization must maintain connections to all those different partners and tools — things like processors and PayPal that get the transactions flowing.
Then, there’s the accounting side of things. When an organization wants to push money out to somebody, it’s because that person did something for the company — and the work completed must be tracked from an accounting perspective. Ledgers must be kept balanced. Reconciliation must be noted.
Compliance and reporting requirements create a crossover between payroll, banking and accounting systems. And, said Parker, there’s no one connection that does it all.
It’s complicated, but to Parker, the implications are simple: Interoperability matters, and solving it powers the three Cs that keep users coming back: Compliance, convenience and choice.
Karen Webster wrote this week that timeliness and choice in payments made a huge difference in how workers thought about their gig. When payments were received quickly, workers felt much more positive. 84.3 percent told PYMNTS they would do even more work if they got paid faster.
If, however, workers were not offered convenience and choice, it could lead to another, less desirable “C” – Churn.
“People usually do gigs for additional income, not as their primary or only income,” Parker noted. “Since it’s an extra, they need to get paid conveniently so they’ll do the job again.”