The evolving role of payments in the gig economy

The growth of the gig economy continues to be on the rise, but so too are concerns about how a global economic downturn might impact the financially excluded. The Paypers sat down with Nuvei’s CRO and Global Head of Ecommerce, Laura Miller, to find out more about the future of the gig economy and what platforms should consider when engaging their workforces.

The gig economy spiked during the COVID-19 pandemic, reaching up to 1.1 billion workers worldwide and over 55 million workers in the US alone. Given the current global turmoil and economic insecurities, how do you see the evolution of the gig economy in the following five years?

The COVID-19 pandemic transformed the world of work for people around the globe. Long-term consequences of the pandemic include greater remote working and flexible working, and we also saw a rapid rise in unemployment spark growth in the gig economy workforce. Additionally, while unemployment did subside in the immediate aftermath of the crisis, the gig economy has continued to thrive, with the industry expected to exceed USD 450 billion in transaction volume by the end of 2023.

That is because not all factors contributing to the rise of the gig economy are financially motivated. A preference for flexible working, especially for people who also look after dependents that might not be able to work otherwise, is an important driver. Platforms for freelance workers are also scaling internationally, enabling businesses to connect with talented professionals across the globe in a way they couldn’t before – and with new frontiers of the gig economy, such as the creator economy, already booming, there will be even more opportunities for people to join the gig economy workforce in the coming years.

It’s still not clear how the global economy will evolve, and at Nuvei we are not predicting any impact of an economic downturn. It is also very difficult to make any informed predictions five years into the future. But every trend we have identified indicates that the global gig economy is going to continue to maintain its growth trajectory.

What are the main challenges faced by the gig economy globally, and how can alternative payment methods serve the underbanked sector?

There is significant crossover between the gig economy workforce and financially excluded populations – and financial exclusion is not an issue that is limited to the developing world. In the US, 4.5% of households don’t have access to a bank account – and this is especially prevalent in low-income households.

Any impact of the global economic downtown that results in further growth of the global gig economy could contribute to this issue. For example, in some regions, women are almost twice as likely to be in insecure work positions than men, and, at the same time, the gender financial inclusion gap is also growing. So, we are likely to see more and more unbanked and underbanked workers drawn to the sector. 

For gig economy platforms looking to scale, engaging with this workforce is not straightforward. 

• People want to be paid using the payment method they use to spend money (issuing/prepaid cards would be popular). 

• Due to the makeup of the gig economy workforce, platforms need to offer more payout methods than traditional workforces. 

• People who are unbanked also might not have identification documents or addresses (digital wallets where consumers can sign-up directly with just an email address are popular). 

• Fast and secure earned wage access is vital to the gig economy workforce. This typically means gig economy platforms must process irregular payins and payouts quickly, safely, and leveraging the customer’s preferred payment methods. They need a specialist payment provider competent in handling these requests. 

Finally, what is Nuvei’s approach towards the gig economy, and how important do you think this is for creating a stable financial environment and driving financial inclusion globally? 

Our mission at Nuvei is always to enable our clients to connect more closely to their customers through payments. We have over two decades of experience and a rich technology stack supporting payouts across a wide variety of ecommerce industries, including enabling gig economy platforms to establish deeper relationships with their workforces. 

The correct payments solution connects businesses to people wherever they are – and via every relevant payment method. For international workforce platforms, that’s paying workers quickly, safely – and, importantly, in the correct currency – via a payment method they can access and trust. These could be direct payouts to bank cards, prepaid cards, or digital wallets. 

For example, we recently announced a partnership with inDrive, the second largest mobility platform in the world, to support payouts to drivers in Latin America, including payments to cards and all relevant alternative payment methods in the Latin America region through a single integration. Nuvei’s collaboration with inDrive is particularly significant for the Latin American market, where businesses face unique payment challenges, including lower card acceptance rates and a significant unbanked population that relies on alternative payment methods for financial inclusion.

This editorial piece was first published in the Payment Methods Report 2023, which provides an in-depth overview of the latest worldwide developments in how people pay, the payment methods space, the innovative technologies that these methods work upon, and the best strategies on how to win at conversion and retention.

About Laura Miller

Laura Miller is a renowned name in the financial services industry, with nearly 25 years of expertise in strategic planning, sales leadership, and business development within the payments sector. Laura has held prominent positions at leading global financial institutions and prior to joining Nuvei, she served as President of JPMorgan Merchant Services, overseeing the bank’s commercial relationships with its largest global customers. Her tenure at American Express also showcased her exceptional talent, where she played a pivotal role in driving sales growth and client management in the commercial card segment.

About Nuvei

Nuvei is the Canadian fintech company accelerating the business of clients around the world. Nuvei’s modular, flexible and scalable technology allows leading companies to accept next-gen payments, offer all payout options and benefit from card issuing, banking, risk and fraud management services. Connecting businesses to their customers in more than 200 markets, with local acquiring in 47+ markets, 150 currencies and more than 600 alternative payment methods, Nuvei provides the technology and insights for customers and partners to succeed locally and globally with one integration.