Instant Pay Critical in War for Freelancers
In an age of scarce talent, quick payment options can be a competitive advantage.
Businesses’ outdated payment systems can run into delays and errors that can quickly lead to financial hardship for employees. And for freelancers and contractors, these issues tend to be more common, according to “Expanding Payments Choice,” a collaboration between PYMNTS and Onbe.
Get the report: Expand payment choices
This is particularly troubling for workers who lack the benefits of full-time staff and are entirely dependent on timely payments for their livelihood. By giving them access to their salary as soon as it is earned, and thus helping to deal with their potential financial difficulties, digital payments could significantly influence employment decisions and retention.
An Onbe survey of more than 650 American workers found that hiring freelancers is crucial to ensuring productivity and preventing burnout. But that only works if these freelancers are paid properly, on time, and through their payment method of choice. Forty-one percent of survey respondents who identified as freelancers wanted a bi-weekly or weekly salary rather than a monthly salary or payment at the end of the contract.
Mitigation of payroll errors and delays
Payroll may seem like a simple operation, but multiple hurdles can get in the way of paying workers accurately and on time. The main culprit is reliance on outdated manual payroll processes. A survey found that two-thirds of companies perform at least some of these processes with only human staff.
A rapidly gaining ground in mitigating payroll errors and delays is instant pay, where workers are paid immediately after their shift rather than waiting for a designated pay period.
When it comes to faster payments, there’s a growing realization that for different consumers and businesses, speed goes both ways and the definition of “fast” varies widely, Onbe CEO Bala said. Janakiraman, to PYMNTS in an interview in May.
Read more: Customer choice is as important to RTP as speed
“There’s a reciprocal equation when you and I as consumers want to get our loyalty payment, our incentive payment, our refund payment, our labor payment,” Janakiraman said. “I want to get it as quickly as possible in the method that I’m most comfortable with as a receiver.”
Making instant payroll a reality
Setting up instant pay is hardly automatic, but various solutions are available to make it a reality.
One option is a physical or online debit card. Workers can transfer their earnings to their bank accounts, withdraw them through an ATM, or spend them using the card like any other debit card at retailers and merchants.
Other companies leverage The Clearing House’s RTP network, depositing funds into employee bank accounts immediately after each shift or gig rather than at the end of a pay period.
Whichever option employers choose, Instant Pay is a slam dunk from both an employer and employee perspective. This gives workers greater financial stability, while businesses can reap the benefits of reduced turnover and a happier workforce.