Payday on demand: How fast payouts are crucial for creators and gig workers

Over the past decade, the gig economy, an employment sector based on short-term contractors, has flourished. Over one third of the U.S. labor force now identifies as “independent workers” — which can include anyone from college students working for a rideshare to content creators monetizing their fanbases — up from 27% in 2016.

Propelled by increased digitization, rising costs of living and a cultural shift toward more flexible schedules, gig work is now thoroughly mainstream, says Sherri Haymond, Co-President of Global Partnerships at Mastercard.

“A large percentage of Gen Z aren’t even considering going into a normal salary job,” Haymond says. “That shows how important a part of the economy this is — it offers a lot of value like greater autonomy, flexibility and career opportunities.”

As much as consumers and businesses have benefited from just-in-time services to fulfill immediate needs, the gig economy can pose some challenges for workers and creators. When it comes to wages, gig-based businesses are often stuck in a traditional model of work now, get paid later. Content creators may get small slices of income from multiple sources, but accounting for that money and getting fast access to it can be complicated and time consuming.

Flexibility — and uncertainty

For many, gig work and content creation provide an opportunity to turn a side hustle into a small business with the autonomy to choose their own projects and chart their own futures. This kind of work also offers liberation from the 9-to-5 grind, allowing, say, parents of young children to continue their careers or part-time workers to supplement their wages.

Ashley Ware, a nursing student, juggles a demanding schedule. But in between studying and clinical hours, she makes ends meet by taking on odd jobs, such as housecleaning and gardening, through an app that offers same-day services.

“Having flexible work has been incredibly helpful while I’ve been in school,” she says.

However, relying on slow-to-arrive and difficult-to-track payments via cash or check make it hard for her to predict income and plan a budget.

“Many gig workers have unpredictable and irregular income streams,” says futurist Shivvy Jervis. “As a result, speed of payment is their top priority.”

To cover everyday expenses, gig workers and content creators must often stitch together income from multiple sources. According to Mastercard research, they are also more likely than the average consumer to dip into their savings to pay the bills. As a result, these workers need to know they will be paid for each job and have access to their wages and tips as soon as they are disbursed.

This dynamic has posed new challenges for the digital platforms that facilitate services between freelancers and customers. At the beginning of the decade, many platforms were paying workers once a week or even once every two weeks. These pay-outs were often conducted via bank transfer, which typically takes one to three days.

Yet as competition for users intensified, platforms realized they needed to attract top talent. So, they began collaborating with financial service providers to facilitate near-real-time earning opportunities and fast, transparent payouts.

And as the digital revolution brings together contractors and clients from around the world, the demand for secure cross-border payments is surging. Gig workers now account for roughly one in ten consumers making or receiving cross-border payments. However, because many banks rely on decades-old, paper-based infrastructure to transfer money overseas, these payments can take days — an added hardship for the people who rely on them as a lifeline. Plus, if they don’t have a bank account or if the payment infrastructure in their area is limited, workers must find an alternate way to receive and manage their earnings.

A team effort

To help gig workers and content creators overcome these challenges, the financial ecosystem has come together to implement major upgrades to its payment channels.

“Through collaborations and innovation, Mastercard and its partners have built new infrastructure that digitizes disbursements to meet the demands of today’s digital-first society,” says Haymond. “It’s about ensuring those who are part of this workforce have quick access to and full visibility into their cashflow.”

Stripe, a technology company that builds financial infrastructure, has been part of that effort for over a decade. Gig work platforms and marketplaces use Stripe Connect to manage fund flows. Stripe’s users include AirbnB, Uber, Instacart, DoorDash, and Substack.

When a platform or marketplace builds on Stripe, they can offer instant payouts to their customers. For example, a writer who has a blog on Substack can instantly access their earnings when readers are paying their dues on different days.

Stripe has been teaming up with Mastercard to help advance the technology that underpins it. Enabled by Mastercard Move, platforms and marketplaces in the U.S. that build on Stripe can distribute fast payouts to debit cards as well as some U.S. bank accounts.

Mastercard Move, Mastercard’s portfolio of money movement capabilities, provides banks, payment service providers and direct disbursers with a fast, transparent, secure and efficient money transfer solution, serving both domestic and international needs. The portfolio of solutions reaches more than 180 countries and 150+ currencies, with access to more than 95% of the world’s banked population.

In addition, thanks to Mastercard's expertise in navigating regulatory environments and understanding of local market dynamics, Mastercard Move helps customers comply with local and global regulations.

The portfolio is also complemented by innovative cyber and intelligence tools to enhance security, increase fraud protection, and optimize the end user experience.

“We have multiple ways of detecting if you are who you say you are,” Haymond says. “We've included a lot of that technology in Mastercard Move, which reduces fraud and cost for employers. It gets rid of noise and gives people confidence in the service.”

Gig platforms are already experiencing positive impacts. ShearShare, a marketplace that allows hairdressers and other beauty professionals to rent workspace on demand at salons in over 1,000 U.S. cities, through their participation in Mastercard's startup engagement program Start Path, was connected to a Mastercard Move enabled platform to facilitate payments.

“Previously, paying our hosts was a very manual and tedious task,” says Courtney Caldwell, co-founder and CEO of ShearShare. “Now the process is fast and efficient, which leads to happier users and improved retention for us.”

And for gig workers like Ware, who are straddling school and work, having access to fast, transparent and secure payments brings peace of mind. “Gig work is my support system while I’m in school,” Ware says. “I want to help people, whether it’s going into nursing or doing something around the house for a client. That’s what’s makes it rewarding and knowing when I have money coming in helps me keep going.”