Real-Time Payouts Help Gig Platforms Sidestep The Great Resignation

The gig economy is a changeable landscape where worker retention is becoming an issue. It’s also an ideal use case for instant and real-time payouts.

Real-time payments cure a host of ills in a sizeable gig sector that today includes rideshare and food delivery drivers, restaurant servers, cleaning crews and a swarm of nonsalaried workers who get paid by the task, ride or delivery and want their wages now.

With surveys finding that just 15% of the estimated 59 million U.S. gig workers have the cash on hand for an emergency, and given that 29% took costly payday loans in the past year, it’s a space ripe for disruption with real-time payments and early-wage-access solutions.

At managed disbursements platform Onbe, Chief Financial Officer (CFO) Brian Levin told PYMNTS, “When you [think of] the 15% of the people that are paying for access to money or taking payday loans or other ways of gaining access to funds faster, those are expensive solutions.”

That cuts both ways, with gig workers paying to get their earnings faster and gig platforms paying to disburse wages via legacy means. So, payment becomes not just a hassle but a two-headed cost monster, frustrating gig workers and slicing into employer margins.

“The pain points that we’re allowing to be removed are the connectivity to these time systems, these record-keeping systems, and giving them the reporting to allow them to reconcile and track what people are owed and what people have been paid,” Levin said.

“Where we can get faster payments to the recipient through some of our technology is through real-time payments,” he added. “What that looks like is dispersing funds on an off-pay cycle, giving access and integrating within time tracker or timekeepers of record, giving them the tools to disperse funds” faster, at less cost, and with the digital flexibility the gig economy rides on.

See also: The Expanding Payments Choice Playbook

Scaling Fast Payouts, Lowering Costs

Noting that payday loans and similar form factors like checks are expensive and time-consuming to distribute and reconcile, that’s disruption going in the wrong direction.

But it doesn’t have to be.

“We can give them a technologically forward-facing solution that gives them access to their funds faster, via early wage access or faster access to real-time payments,” Levin said.

In addition to speed and access, this approach features choice, and that’s critical.

“Choice is the ultimate ubiquitous way to get paid, right?” he said. “If you want to get control of your money, you want the choice on how you access that money.”

Fail to offer that payments choice to gig workers who often have active relationships with more than one platform, and that driver or freelancer will simply move to the next gig. With 11 million jobs now open in the U.S. and the so-called “great resignation” ongoing, retaining the loyalty of reliable gig workers is all about the money.

“There’s no vacation time,” he said. “There’s no sick time. They’re contract workers. Money really is the driver, and [over] 80% of the decision making for some of these gig workers is based on money.”

Hence the need for real-time workforce payout solutions that give gig workers options for accessing not only earned wages but early access to wages they’ve yet to generate.

Those providing choices are reaping benefits.

“One of the things that real-time payments and payment tools and choice specifically help with is not only giving [workers] off-cycle pay, giving them access to that pay faster, but also becoming more loyal to that provider,” Levin said. “Now they get not only access to their wages faster, different modalities with choice, and also a cheaper solution, more secure solution, and a faster receipt of that money. That provides some loyalty back to the corporate sponsor.”

Read also: How Grubhub Leverages Instant Payments to Improve Driver Satisfaction

Disruption With a Difference

Providing the payment is one challenge, but it’s attended by other parts of the real-time package, like messaging and crucial details that ride along with irrevocable real-time payments.

And it goes beyond that to a series of issues around securely sending and receiving real-time payouts with a nontraditional workforce that requires solutions to be fast and smart.

With Onbe’s capabilities in virtual accounts, physical and virtual cards, same-day automated clearing house (ACH), push to bank account, push to debit, plus premium currency conversions for cross-border payments, “all of these choices give real-time access to funds, off-cycle if needed, but also then gives the corporate partner the ability to reconcile through reporting and reducing their costs to support the payments,” Levin said.

Eliminating much of the back-office busy work and increasing visibility with reporting tools and reconciliation tools all assist companies in paying gig workers faster, with security and accuracy. That’s the win-win of real-time for platforms and the gig workers they rely on.

And it’s that best-case scenario of disruption being a genuinely good thing, radically modernizing yesterday’s payments modalities to align with gig workforce realities.

“With any integration, there’s an opportunity,” Levin said. “That’s where we use what we’ve built in the scalable way we built it to allow for the [application programming interface (API)] connectivity and the systems connectivity for an efficient migration, or to allow efficiencies through conversion.”