67% of Microbusinesses Likely to Work With Companies That Offer Free, Instant Disbursements

Fulfilling payments needs quickly is crucial for companies looking to compete for the services of microbusinesses — businesses with up to 10 employees, including solo entrepreneurs or self-employed freelancers.

In fact, 67% of microbusinesses said they are likely to keep doing business with companies that offer free, instant disbursements, according to the Disbursements Tracker, a PYMNTS and Ingo Money collaboration. Conversely, only 31% of microbusinesses said they would be willing to continue their business relationships with firms that did not offer instant payments.

Get the report: Disbursements Tracker

“When the early gig economy innovators launched the first instant payments use case five years ago, the desire was to provide the ability for workers to choose when they got paid: to wait for their regular paycheck or to choose to get their pay on demand, immediately, for a fee,” Ingo Money CEO Drew Edwards told PYMNTS.

A Growing Number of Microbusinesses

The growing demand for the services of people receiving these disbursements was highlighted by a recent report that consumer ride-sharing spending around the world is expected to rise to more than $937 billion by 2026.

Read more: Consumer Ridesharing Spending Expected to Reach $937B by 2026

Figuring out how to support the instant payments that gig economy workers and other microbusinesses are requesting is thus a top challenge for financial institutions (FIs), payment providers and the platforms that gig workers rely upon for their income. Firms must be prepared to innovate their payment processes and offerings quickly to keep pace.

More than a third of Americans conduct some type of freelance gig or act as rideshare drivers or grocery couriers via gig platforms. The flexibility gig work offers is increasingly attractive, but the jobs often lack many of the traditional protections or benefits attached to full-time work.

This puts a tight financial squeeze on freelancers. Many are seeking swifter ways to receive outstanding funds from previously completed jobs or the weekly wages they may be receiving from gig platforms.

Increasing Reliance on Freelancers

This desire for faster payments is becoming critical to those who employ them, as more U.S. businesses become reliant on freelancers. Their presence at companies has grown 15% since 2010.

Payors appear to be catching on to the trend of instant payments, with one PYMNTS study finding that 68% of payors are willing to pay a fee themselves to be able to offer instant payments to their payees. Twelve percent of microbusinesses would also be willing to pay as much as $5 for this service.

Barriers to instant payment remain in this market, however, as outdated infrastructure and the continued reliance on paper-based processes stall disbursement speed. Addressing these problems is therefore crucial to the gig economy’s continued growth.

“We are now on the cusp of the next frontier of disbursements, Disbursements 3.0: the ability to offer choices across all use cases, no matter the complexity,” Edwards said. “What started with paying drivers faster will end up evolving into an ecosystem with new business models born out of the many choices recipients get to make.”

Keeping pace in the new payment landscape is going to be critical for firms in all industries, whether their workers are contractors or full-time employees. Companies will want to monitor these emerging payment trends carefully as the gig economy grows in both scale and influence.