How Payment Gateways are Shaping the Gig Economy

For many decades, working 9 to 5 was the general norm. However, in 2024, the scenario is not the same anymore. A new buzzword in the job market is the "gig economy."

The gig economy refers to the workforce of people who make a living through freelancing and side hustle work.

The gig economy culture is rising globally, and the scene is no different in the MENA region. According to an analysis by recruitment agency Outsized, the region is witnessing the fastest gig economy growth, with freelance registration jumping by 142% from 2022 to 2023.

While many factors influence this trend, payment gateways have a direct role in reshaping the gig economy.

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Role of Payment Gateways in the Gig Economy for Gig Workers

While in a traditional setup, an employee receives payment/salary once a month, the whole payment system for the gig economy works differently. Gig workers get paid every day/week/month depending upon the terms agreed with their respective clients.

Plus, gig workers can pick up work from any geography, which means different currencies are involved. Payment gateways make it convenient both for businesses and gig workers. Let's see how.

1. Facilitating Smooth and Timely Transactions

To build a sustainable freelance business, gig workers must have access to fast and reliable payment methods. Payment gateways just fit right because, with payment gateways, automated processes ensure faster transactions than manual processing.

Some popular payment gateways gig workers often use are PayPal, Stripe, Square, Wise, etc. Most of these payment gateways support multi-currency transactions, so freelancers working with international clients can get paid more efficiently.

Getting paid on time is crucial for every gig worker because it honors the commitment. This ensures that freelancers can rely on consistent income to support their livelihoods while building trust and credibility with their clients. Payment gateways just fulfill this requirement.

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2. Ensuring Secure Payments

With the rise of the gig economy, digital payments are accelerating. But at the same time, payment frauds are on the rise, too. A news report mentions that 54% of UAE customers have been fraud victims at least once. Data breaches and fraudulent transactions are leading to financial losses for gig workers.

So, what you can do?

Leveraging a payment gateway that has invested in a robust security system is a logical measure to safeguard gig workers. Payment gateways like PayBy offer end-to-end communication encryption using TLS and SSL Protocols, CFCA security password control solutions, AI-based fraud monitoring, and 3D secure authentication.

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3. Reducing Administrative Burdens

Apart from doing client work, gig workers also need to manage many administrative tasks, such as networking with prospective clients, managing invoices, tracking payments, and managing their taxes.

As gig workers expand their businesses, keeping track of multiple invoice statuses and following up on payments becomes difficult.

A payment gateway solution can help reduce their administrative burden by automating invoices and tracking payments. For example, PayBy offers automated payout solutions that streamline operations and records. So, gig workers can directly receive money in their bank accounts with no delay.

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4. Enhancing Financial Inclusion

Payment gateways enhance the financial inclusion of unbanked and underbanked gig workers who can still receive payments through these gateways.

This financial inclusion gives gig workers the freedom to choose their clients internationally and not just remain restricted to domestic clients. Alternative payment solutions like mobile payments and digital wallets give gig workers better accessibility, and their financial freedom is not just restricted to their local banks.

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5. Boosting Trust and Transparency

Payment gateways help build trust and transparency through secure payment processing. In addition to implementing a secure payment processing system, many payment gateways have implemented dispute resolution mechanisms for payment-related issues.

For example, when a payment gateway offers a detailed transaction record, it automatically enhances transparency and accountability, which fosters trust among gig workers.

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6. Innovative Features and Services

Gig workers always seek a good payment experience, which often translates to faster payments. Faster payments mean a sustainable source of income that can pay the bills and bring peace of mind to the gig worker.

Payment gateways have made instant payouts and on-demand payment options possible, which means gig workers can receive real-time funds often unsupported by many traditional banks.

Additionally, these payment gateways support multi-currency conversion, facilitating international transactions.

Many gig workers work on different freelance platforms and are paid through these platforms. Payment gateways can easily integrate with these gig platforms and marketplaces, making a seamless payment experience for all.

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7. Navigating Challenges

As gig workers work with multiple clients globally, tackling compliance issues becomes critical. 

Payment gateways like PayBy mitigate such challenges early on. For example, PayBy ensures compliance with industry standards while handling payment data.

In addition to navigating regulatory and compliance issues, payment gateways minimize transaction fees so that gig workers don't lose money with every transaction. 

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Role of Payment Gateways in the Gig Economy for Employers 

Employers who regularly work with gig workers can benefit from adopting payment gateways in multiple ways. Here's how. 

1. Streamlined Payment Processes

Employers who work with multiple gig workers can benefit from using payment gateways. For example, by partnering with PayBy, employers can simplify payroll management as it streamlines operations and records. You can directly transfer payments to their bank accounts or wallets, monitor the payout status, and process invoices in bulk.

The automation feature of payment gateways helps reduce time spent on manual processing and administrative workload. Since payments are automated, you can schedule them, ensuring workers are paid on time. This will help build trust and retain your gig workers.

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2. Improved Financial Management

One of the biggest benefits for employers using payment gateways is that they can easily integrate with their existing accounting and financial software, allowing them to track their finances.

For example, PayBy easily integrates with different apps, minimizing disruption to ongoing operations. It gives real-time access to all the transaction data and financial reports that ease budgeting and financial forecasting while maintaining all payment records accurately.

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3. Enhanced Security and Fraud Prevention

Payment gateways like PayBy make every transaction safe with enhanced security and fraud prevention features. For example, PayBy has invested in AI-based fraud monitoring, 3D secure authentication, transaction risk analysis, encryption, and tokenization to ensure safety.

While such preventive measures reduce the risk of payment fraud and financial loss, they also help build trust with workers through secure payment practices. These measures ensure the gig workers' hard-earned money is in safe hands, which helps build long-term relationships with the employer.

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4. Cost Efficiency

High transaction fees often concern employers and gig workers when working internationally. For example, a traditional bank in the UAE charges a 2.99% foreign transaction fee, whereas PayBy charges 2.5% for domestic transactions and 2.8% for international transactions.

Compared to traditional banks, payment gateways reduce the administrative costs associated with manual payment processing. Moreover, different payment gateways have different competitive pricing plans that help employers save money on each transaction.

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5. Flexibility and Scalability

Different gig workers have different payment requirements and preferred currencies in which they want to be paid. Working with a payment gateway solution makes managing these varying payment needs easy, especially when your business grows, and you start working with multiple gig workers.

With payment gateways, you can choose different payment methods, such as bank transfers, digital wallets, credit cards, QR code payments, etc., to accommodate the preferences of different gig workers.

Plus, it can easily integrate with your existing accounting software, so your finance team can monitor every transaction and maintain the books without hassle.

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6. Global Reach

One of the main reasons employers work with gig workers is their access to the global talent pool.

However, traditionally, paying international workers is not easy. You must approach the bank, follow the paperwork, check the conversion rate, and pay a huge transaction fee. Moreover, traditional bank transfers can take several days, delaying the payment cycle.

Payment gateways facilitate paying international workers easily. These platforms support multi-currency transactions with automatic currency conversion. The payments can happen in real time while staying compliant with the local regulations and payment standards in different countries.

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7. Enhanced Worker Satisfaction and Retention

Timely payment is of utmost importance for gig workers to build a sustainable business. Not paying gig workers on time can turn the relationship sour, forcing them to leave you and look for work elsewhere.

However, with a reliable payment gateway solution, you can ensure timely payments for your gig workers. A better payment experience would bring peace of mind and improve worker satisfaction and loyalty.

Additionally, every payment gateway offers a transparent transaction history that further helps to reduce disputes and build trust.

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8. Data Insights and Analytics

Apart from easy payment processing, payment gateways like PayBy give access to in-depth and real-time insights with data visualization to track transactions, payment trends, and workers' financial behavior.

You can optimize your payment process, improve your financial strategies, and make better business decisions using these analytics reports.

9. Compliance and Reporting

When you pay international gig workers, you must adhere to regulatory compliance and reporting requirements. Failing to do so can result in unwanted tax implications and penalties. This can lead to huge financial loss, especially if you're working with multiple international gig workers.

Payment gateway solutions can help simplify tax reporting and filing, ensure adherence to labor laws, and regulate payments so that your books remain error-free.

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Key Takeaway

The gig economy in the MENA region is growing at a rate of 3.2%, so it can be said safely that it is here to stay, at least for the next few years.

Adopting a payment gateway solution like PayBy for seamless international transactions is a win-win for employers and gig workers. While employers can save costs and conduct multi-currency transactions compliantly, gig workers can receive timely payment through a safe and secure platform.

Are you ready to experience it? Get started with PayBy today.