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Mastercard expands real-time payments to gig economy workers

Mastercard has identified a business opportunity in the so-called ‘gig economy’, characterised by temporary positions and organisations contracting with independent workers for short-term engagements.

The steady growth in recent years of the gig economy, has seen an increasing demand from its workers or quicker access to their wages than they can get through traditional payroll schedules.

To facilitate faster delivery of wages to gig and hourly workers, the payment card giant  has partnered in the US with Tennessee-based Evolve Bank & Trust to push wages in real time through its Mastercard Send platform to any debit card issued in the United States.

Branch Messenger, a Minneapolis-based tech firm specialising in mobile-based pay advances to hourly-paid workers, is also partnering with Mastercard and Evolve Bank, Mastercard announced.

Awaiting the next cheque

Using the new service, Branch says it will fund pay advances on behalf of employers who will settle with Branch when payday arrives. Employees making use of the service are charged US$3.99 per instant advance. Limits on the amount to be advanced will be determined by individual employers.

Mastercard Send is the group’s real-time push-payments network, through which it has worked with banks, businesses, and digital wallets to deliver funds to bank accounts, prepaid debit cards, mobile wallets, and select cash-out locations.

With gig workers paid only when an assignment is completed, which could take weeks, and hourly workers not always having a set schedule, many are taking pay advances where possible, reports suggest.

Gig workers typically live from one paycheque to-the next and are paid once an assignment is completed, which could mean waiting for several weeks for payment, Mastercard says. In the meantime, they have expenses to cover, while a significant number have little or no savings.

“Pay advances help workers get paid sooner for work they have accomplished and that helps to avoid financial hardship,” says Sarah Grotta, director for the debit and alternative products advisory service at consultancy Mercator Advisory Group.

She cites ride-share drivers as a good example of gig workers who can benefit from pay advances, as they have operating expenses such as fuel and vehicle servicing, that if not met will keep them off the road and not earning until their next payday.

Creating easier access to pay advances can also help employers in the gig economy retain workers. “There is high turnover among hourly and gig workers and employers that provide this flexibility have a better chance at retaining employees and attracting new ones,” says Atif Siddiqi, chief executive at Branch.

Both Mastercard and Visa, with its competing Visa Direct service, have been finding increasing uses for their real-time push-payment networks. These services allow financial institutions to fund debit cards within minutes via a technique called an original credit transaction, which was originally designed to handle in-store refunds for cardholders.


This item appears in the following sections:
Bank Relationship Management & KYC
Cash & Liquidity Management
Cash & Liquidity Management in North America
Financing
Payments - Making
Region
North America

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