Why MicroPayouts are Key to Gig and Creator Economy Growth and Profitability

The Rise of Gig and Creator Economy: A Transformative Trend in the Global Economy

Freelancing work is a trend that cannot be ignored, a massive upheaval to the way we work and a transformative trend in the global economy. Gen Zs and younger millennials are increasingly reliant on the gig economy as their sole or supplementary source of income. Mastercard research predicts that the global gig economy will generate a gross volume of US$455 billion in 2023, twice as much as in 2018. It is also estimated that around 1.57 billion people, or 47% of the global workforce, earn an income as freelancers, with close to 70% being 35 years old or younger.

And the creator market growth is geographically expansive. Africa is estimated to be home to as many as 10% of the world’s global freelance workforce. At the same time, India and Pakistan rank amongst two of the world’s four most rapidly growing freelance markets.

On the service side of the gig economy sector, social media platforms have become digital workplaces for creators and content cultivators, expanding communities of fans and followers.

As creators amass followers, they monetise their content with donations, tips, partnerships, and other funding mechanisms within their chosen platform’s ecosystem.

Servicing Gig Economy: Navigating Payments

With the growth of gig, freelance and content creator segments, the focus on adequately supporting this market becomes increasingly important. To adequately serve the freelancer community, platforms should be addressing the ever-global and youthful creator, and their need to simply make payments out of the platform.

The modern freelancer expects a platform monetisation service to be:

1. Instant or fast
2. Locally relevant, i.e. available on locally popular payment methods
3. Free or with minimal fees
4. “Unfenced”, i.e. available without having to accumulate a significant balance

We’ll examine each of these elements, but on the whole, the answer to all these expectations is the ability of a platform to effectively process micropayouts for global gig economy workers.

Introducing Micropayouts

Micropayouts, as we’ll define here, is a subset of micropayments and specifically refers to small value payments to individuals or businesses in their local currency, usually below US$10.

Making micropayouts run smoothly is the key to serving creators, freelancers, and gig economy workers in the gig economy.

Now, let’s define some of the key challenges in micropayments in the context of gig worker needs.

Key Challenges of Micropayouts

1. Recognising earnings reliably as creators accumulate

• The problem: Creator platforms tend to withhold cash-out until their gig workers have earned over a certain threshold.
• The reason: Using legacy payment infrastructures, like banking rails and SWIFT, to pay creators comes at a fixed cost, which can be especially high when sending smaller value payments cross-border.
• The solution: Platforms need to use a micropayouts infrastructure that can systematically price small-value, high-volume payments on an individual transaction level.

2. Giving freelancers options to get paid in the ways they want to be paid

• The problem: Platforms tend to offer bank account payout, whether that is domestic ACH payment or international wires. Practically for the creator or gig worker, this means additional fees and time to move money that is paid to a bank account to their preferred wallet.
• The reason: Often, legacy payment infrastructure platforms are connected through banking rails, so they are limited to facilitating payouts to a bank account.
• The solution: A micropayout infrastructure provider must offer the ability to make payments beyond bank accounts and serve direct cash-outs to the creators.

3. Providing the ability for gig workers to get paid with minimal fees

• The problem: FX conversion becomes a high-priced and long-timed endeavour when using traditional payment infrastructure. Moreover, creators lose transparency on the amount in local currency they will receive if the funds are sent from a dollar-based platform.
• The reason: Micropayout infrastructure previously did not offer the robustness of FX transparency and globally available payment services. Platforms were limited to the domestic market currency and without visibility into the destination amount received by a beneficiary.
• The solution: Platforms must select a micropayout provider that can simply and transparently convert currency, and share the local currency value of a payout back to their gig worker.

How to Select the Best Payment Platform for Mass Micropayouts

Criteria for Payment Product teams to consider when selecting a mass payouts platform:

• Coverage: The payment platform you choose should be able to process mass payouts in the currencies and payment methods your recipients prefer.
• Reliability and scale: The ability to process large volumes of small transactions for micropayouts at scale.
• Compliance with regulations: Compliance with local and international regulations.
• Security and fraud prevention: The platform should have robust AML screening for every microtransaction
• Flexibility: The ability to customise the micropayout solution to your specific business needs. 
• Customer support: Look for a payment infrastructure platform that offers robust customer support, with multiple channels for getting in touch. You should also check that customer support is available 24/7 to ensure that global issues or concerns can be addressed promptly.
• Pricing and fees: Finally, consider the pricing and fees associated with the platform. Look for a payment platform that offers flexible pricing, with no hidden fees and transaction costs that match your use case.

How Thunes can Streamline Operations and Money Flow

Freelance and creator platforms that do not have an efficient micropayout function may lose their creators and, ultimately, their users. Gig worker platforms rely on the quality of their service to their community, and global payments are an important component of this service. Selecting an infrastructure provider for micropayouts to cash out a freelancer requires close attention to the following:

1. Speed
2. Coverage
3. Transparency

At Thunes, we have developed a reliable and scalable platform that can process high volumes of cross-border transactions in near real-time. All transactions are processed at the same speed, regardless of the volume of payments.

Thunes’s platform offers users a detailed, transparent view of each transaction upfront, including FX and transaction fees. This allows platforms to know the cost of sending money and exactly how much the beneficiary will receive in their local currency.

Moreover, Thunes’ transaction fee structure is flexible, enabling even cross-border transactions from as low as US$1 to be profitable.

Because of this, Thunes has been selected by some of the top creator economy platforms and gig economy providers to process transactions to their freelancers around the world. By supporting partners with a flexible pricing structure and infrastructure, Thunes breaks down the barrier of limitations on thresholds and quality for micropayouts.

On top of reduced wait times, on-demand cross-border transactions provide creators and freelancers with financial stability, knowing that they can rely on your platform to provide them with a reliable source of income. This gives them the headspace to focus on what they do best, creating.