Despite widespread debate over workers’ rights, the global gig economy is booming.
Research from Singapore-headquartered global payments company Thunes shows that it is projected to grow from the current market estimation of about $100 billion to up to $4 trillion in the next few years.
While sharing that data with PYMNTS in an interview, Thunes Head of Product Bogdan Dinu highlighted the important role that individuals in the creator economy, particularly in emerging markets like Brazil, India and Eastern European countries like the Czech Republic and Romania, are playing in the rapid growth of the online gig economy.
“We’ve seen that online content consumption is at an all-time high, and it’s going even higher,” Dinu told PYMNTS. “We’ve also seen that users are spending double the amount of time consuming global content from social media platforms than before the pandemic.”
The challenge with developing markets, however, is the large number of unbanked and underbanked individuals there, Dinu explained, adding that the problem is further complicated by the small amounts of money platforms pay out to creators — “often as little as $3” — which can generate bank transfer fees as high as $20 in some countries.
As a result, it’s become crucial for platforms serving creators to provide them with alternative payment methods to send and receive payments, a need that some of them are not able to meet.
For FinTechs like Thunes, it has created a huge opportunity to plug that payment infrastructure hole, enabling platforms to offer a broad range of payment methods like “the M-Pesa mobile money service wallet widely used in Kenya or an Alipay or WeChat pay account when sending money to China,” he noted.
Today, the B2B payments company, founded in 2016, supports over 80 currencies and enables payments to 125 countries while helping customers receive close to 285 payment methods.
On global B2B trade, Dinu dismissed the widespread utopian belief that integrating only one provider is enough to ensure a seamless trade process.
“The reality on the ground is far different,” he said, pointing to complex regulatory landscapes and fragmented bank relationships that need to be managed across countries and regions, as well as political instability and trade protectionist policies countries have put in place.
“These complexities will delay that utopia of having a single global payments provider, and we’re not [going to see that coming in the medium term],” he predicted.
Transparency Over Real Time
In the meantime, Dinu said payments for small- to medium-sized businesses (SMBs) lag behind innovation in consumer payments and are in need of a major boost.
This is even more critical now as more SMBs are entering the global market and transacting with a multitude of suppliers and buyers worldwide, compared to five years ago when only large corporations dominated the playing field, he said.
To hone their cross-border payment processes, Dinu suggested that businesses streamline their operations and money flows by working with a global infrastructure provider like Thunes to gain operational efficiency and benefit by better foreign exchange (FX) rates, for example.
“If you have a company in China and you want to do business in Brazil, the rate that the bank in Brazil will give you will be much higher than the rate that you can get from [a global cross-border payments provider],” he noted.
And while real-time payments have become increasingly important in global trade, Dinu said he is of the view that businesses, unlike consumers, attach a higher degree of importance to transparency in the transaction time as well as the cost involved, given their sensibility to unpredictable FX rates and hidden fees that can cut into their projected profits.
Real-Time Settlement and Secure Transactions
The pandemic-induced boom in cross-border eCommerce has led to an increase in digital identity thefts and data breaches across multiple industries, a crisis that the biometric two-factor authentication (2FA) method has been helpful in slowing down.
Dinu said 2FA will evolve and become more frictionless with time and, coupled with the maturing of artificial intelligence (AI), will aid in better detecting and preventing money laundering. These solutions, he added, will ultimately lead to a decrease in the cost of cross-border transaction payments.
The accelerated adoption of digital currencies and blockchain technology cannot be overlooked either, he said, adding, “[The rails that Thunes built], for example, will become the preferred mode of payment, enabling instant, real-time settlement and secure transactions.”
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