What Home Businesses Can Learn from the Gig Economy

Yes, the gig economy is transforming—no, disrupting—the global workforce. We’ve heard it all before; it’s old hat now.

While much has been written about the gig economy, it’s clear that this short-term, freelance workforce underpinned by a web or mobile app has redefined all expectations. The gig economy is transforming the global workforce—and that includes payments.

Everything on demand

Beneath the elegant interface that makes it so easy to hail a ride on a busy Friday evening or order takeout from that Thai fusion restaurant that’s always booked solid, is a sophisticated set of APIs that powers the payments for both Lyft and Postmates. And just as easily as you can request a fare or place an order for a papaya salad, the payment travels in real-time between your account and the merchant’s.

That’s the value of the gig economy: instant delivery matched to instant funds. As anyone who’s taken an economics class can attest, this perfect pairing in the marketplace, this rapid fulfillment of wants and needs, is what makes the gig economy revolutionary.

But the gig economy also demonstrates that technology exists for merchants to receive immediate payment. It proves that payment between both parties can move seamlessly (which also encourages both parties to keep working within the same platform).

A new status quo?

Take Lyft and Uber, for example: aside from the standard, automatic weekly deposits, both services allow its drivers to initiate an immediate cash out of the day’s fares, receiving funds in as little as a few hours. Or, better yet, Airbnb initiating payment transfers to hosts before their guests have left.

Compare this to how companies make payments.

A typical accounts payable department in a medium-sized company can easily issue over 500 checks per month. Also, consider the amount of time it takes to write all of these checks. It’s not atypical for an accounts payable department to spend the greater part of a week preparing and issuing check payments.

The accountant issuing all those checks can’t help but notice the stark difference between how consumer and B2B payments move. The consumer side is noticeably faster.

Unfortunately, the laborious and time-consuming process of check writing is simply accepted as “the cost of doing business.” Worse yet, if you’re like the average business paying 51 percent of your B2B payments by check, the cost is upwards of $5 per check.

Considering how business payments dwarf consumers in payment volume and frequency, you’d expect a solution for business payments to already exist.

We’ve made a problem

But the gig economy’s payment problem looks nothing like B2B’s.

By empowering the everyday consumer to earn income outside their regular W2 employment, the gig economy faced the expectation for immediate payment. That consumer doesn’t expect a delay of 30-, 45-, or even 90-day payment terms—they wouldn’t tolerate it.

And with the gig economy marketplace dispersed globally, payments had to scale. When Airbnb tackled this problem head on—they shared the struggle of this challenge:

“As usage spread outside the US, the limitations of this system became clear. Guests in Europe looking to book listings in the US would be charged in dollars and ended up paying an additional conversion fee. In some countries such as Germany, credit cards weren’t commonplace, and German guests couldn’t pay with their most trusted payment method.”

The gig economy’s foresight and resolve of this common business practice was prescient. The payments problems faced by these platforms forced a better solution and demonstrated that there is a better and much easier way to pay suppliers.

Keep it simple

Airbnb and the other gig economy platforms knew the only way to succeed was to make payments as easy, fast, and frictionless as possible. They needed a solution that would scale and handle the glut of demand—and its popularity is proof that it’s succeeded.

The payments problem for other industries isn’t as complicated. For the majority, it’s simply a digital alternative to paper checks.

So the next time you’re dropping a pin in Lyft, ask why your business can’t pay suppliers as quickly—or, alternately—why your business isn’t receiving payment as quickly. If the gig economy is out disrupting markets, maybe it’s time for you to start disrupting your payments.



Spread the love
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  

LEAVE A REPLY