As the gig economy continues to grow at a rapid rate, gig workers and 1099 contractors are expecting more from the hundreds of companies and platforms now competing for their loyalty, especially when it comes to how they get paid.
What does this mean for the companies who hire gig workers and independent contractors?
If you want to compete for the loyalty of gig workers and 1099 contractors, you have to be willing to modernize the way you pay.
The Problem with the Old Ways of Paying Independent Contractors
Recently, we collaborated with Marqeta to learn more about the work and payment preferences of gig workers.
In surveying over 1,000 workers who turned to gig and 1099 work in the past six months, we found that 94% of workers associated faster pay with greater financial peace of mind, with 77% believing it offered a lot of peace of mind and financial security. Plus, most gig workers and independent contractors will only turn to one or two platforms to supplement their income.
The results are clear: if you aren’t offering attractive benefits and faster pay, you’re going to struggle to compete at a time that has led more people to consider gig work than ever before.
What does it look like when a gig or staffing company has to rely on the old way of paying people?
1. It takes longer for payments to reach workers. Traditional pay methods are slow and can take 3 or more days to reach workers.
2. You have to stick to longer pay cycles. Even for the most modern platforms, traditional pay methods still utilize weekly or bi-weekly pay cycles, which make it difficult for workers to manage expenses on time.
3. You might still have to rely on paper checks. Many businesses are stuck paying their independent 1099 contractors with paper checks, as opposed to offering payouts digitally and instantly.
4. You pay expensive transaction and platform fees. Even when they’re able to deliver instant payments, many companies partner with new payment technologies that charge monthly platform or transaction fees to both the company and the worker.
5. It becomes difficult to compete when trying to attract and retain workers. Instant payouts are the new norm in the 1099 world. Fast, free payouts can incentivize the move from one platform to another.
As competition for workers intensifies, you need to think and act differently when it comes to how you pay your people.
Related: Can You Pay Independent Contractors in Cash?
Modernizing Payments Isn’t Just Good for Workers, It’s Good for Business
The growth of the gig economy means there are now more options and companies than ever; contractors can more easily switch one job for another, prioritizing or leaving one platform for another.
When we asked what they looked for most out of a gig platform, workers didn’t just cite higher payouts among their top incentives for taking on gig work, but also faster payouts.
So what does this mean for companies hiring 1099 workers?
The people you want to work for you—the people you need to help grow your business—are looking for opportunities that will give them more money and companies that can give them faster access to the money they choose to earn for themselves each week.
By adopting a modern payments platform, you have a more impactful way you pay contractors:
1. Move money faster. Contract work comes with a substantial amount of pay variance, an issue that’s consistent across other industries for hourly workers. Employees who experience pay variance need to get their wages as soon as possible to help them budget and plan for the week. A modern payments platform helps you move money faster and as a result, give your contractors more financial security and peace of mind.
2. Spend less money on fees. Find a modern payments platform that won’t charge the exorbitant fees you’re forced to pay when you use traditional payment solutions. Reducing the costs of these payments will allow you to invest money in areas that can help you grow and scale your business.
3. Build a loyal base of gig workers. By changing the way you pay people, by paying them faster, by eliminating the fees they’re used to with other gig platforms, you’ll naturally create more loyalty with contractors who want more flexibility when it comes to accessing the money they’ve earned.
4. Manage scalability as your business grows. As you find success in the gig economy, you may find that your custom-built payments solution doesn’t scale very well. A modern, cost-effective payments platform can allow you to manage and prepare for rapid scalability that could come at any moment.
5. Simplify compliance. Find a platform that will save time and costs on compliance, especially around 1099 forms. Taxes for independent contractors can be tricky; the platform should make it easier for handling forms for you and your contractors.
You know what a modern payments platform could do for your business. The question is, are you ready to embrace the future now?
It’s Time to Pay Your Gig and 1099 Workers the Right Way
Here’s the situation we know exists today: companies need a cost-effective way to pay contractors faster.
Reach out to us today to find out how we can help you pay your gig and independent contractors. We’ll give you the competitive edge you need to attract workers, build loyalty, and thrive as a business for decades to come.