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Reinventing the way businesses and workers get paid

An innovative digital tool is helping to put wages into the hands of SMBs and workers in real time

Reinventing the way businesses and workers get paid
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Last year, Ruben Salazar’s daughter Camila graduated from college with an architecture degree. The pandemic was in its early days, and full-time jobs were hard to come by. So, Camila did what any enterprising new graduate would do: she picked up freelance design work, snagging gigs where she could to make an income. But when it came time to collect her wages from one client, Camila was asked to wait for a check. As Salazar recalls, “She kept asking, ‘Why can’t you just deposit that money into my Venmo account or put it on my debit card?’ ”

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It’s a situation Salazar is all too familiar with. As Global Head of Visa Direct, Visa’s real-time 1 push payments platform, he’s trained a keen eye on the payment landscape, identifying the inefficiencies in the traditional ways that businesses and employees are paid. With the pandemic creating more urgency to get people and businesses the money they need to stay afloat, Salazar and his team have identified ways to help get everyone access to their money faster, forgoing antiquated methods like cash and checks. “Even though the environment of working and labor has changed,” he says, “many of the tools that have been used to manage and retain workers haven’t, and that’s what we have been focused on improving.”

Today, new digital tools and technology are becoming available to help make payment processes more efficient for both businesses and workers. Companies increasingly are adopting these tools to provide workers with fast access to the money they’ve earned instead of waiting to be paid during the next two-week or monthly pay cycle.

HELPING POWER THE GIG ECONOMY

Consider the rideshare driver who works all weekend transporting riders around Los Angeles. At the end of the weekend, she’s earned hundreds of dollars in fares—but likely won’t receive that money from her employer for weeks. Meanwhile, she continues paying out-of-pocket to keep her car gassed up and spotless for her next passengers.

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What happens to these gig workers who need to bridge that financial gap, whether to cover an unexpected car repair or following a slow weekend for rideshares? Enter fast gig payouts, a segment that Visa is helping to enable that’s disrupting the traditional way freelancers and independent contractors are paid. With quick access to earnings, gig workers have more flexibility to choose when they tap into the funds they’ve already earned through their various jobs. “With real-time access to your earnings, you are actually able to say, ‘You know what? I’m going to fund this myself, and I’m going to manage my cash flow according to my needs,’ ” Salazar says.

Canadian food delivery service SkipTheDishes recently launched its Fast Cash feature, which uses Visa Direct through their financial institution, to allow their couriers ready access to the funds they’ve earned. “Every day our couriers provide fast and reliable food deliveries to people across Canada, and we wanted to give them that same speed and consistency when it comes to the money they earn,” said Bruno Malhado, the company’s global head of product, couriers. “With the rollout of the SkipTheDishes Fast Cash feature, we’ve seen widespread adoption from couriers who now have more control over when they receive their earnings.”

THE ROLE OF EARNED WAGE ACCESS

It’s not just gig workers who face challenges with traditional payment processes. Salaried or hourly employees can also find themselves facing financial stress between regular pay periods, whether from an unexpected house repair or a sudden medical bill. As a result, earned-wage access (EWA) is gaining ground among companies seeking to provide their employees with quick access to the money they’ve already earned.

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EWA can be an important benefit for workers, but also for companies. A Visa survey2 revealed that two-thirds of workers would choose to work with a company that offers real-time, on-demand payouts over a company that relies on more traditional payment schedules. What’s more, 70% of workers say they’d work more if they could rely on fast, real-time payments for the shifts they pick up.

Payactiv is an EWA provider that has enabled Visa Direct through its financial institution. Nazareth Home, a senior living facility, has been offering the service to their workers during the pandemic. This allows them to access the funds they need to pay for unexpected costs and items, such as gas and insurance, in order to get to work and see their clients every day. Today, four out of every five Payactiv users prefer to access their funds in real-time, through Visa Direct.3

CASH FLOW IS KING

Today, small and midsize businesses (SMBs) rely on fast cash flow in order to keep their businesses afloat. A survey found that 76% of U.S. SMBs have reported struggling with cash flow in the past few months,4 with 91 percent expressing interest in real-time settlement capabilities.6 With real-time payment solutions, SMBs and marketplace sellers have faster access to the money they need. For example, Airbnb has enabled Visa Direct through their financial institution to provide real-time payments for their hosts, giving them better control of their finances so they can continue providing more guests with unique and memorable experiences. Last year, Visa Direct helped enable faster payouts to more than 2.35 million small businesses and sellers7 in the U.S. alone.

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Real-time payments are key in helping to drive more efficient, seamless, and digital-first ways to access money for businesses and consumers alike. Contractors like Camila Salazar and many others are using them to better manage their finances and cash flow, while employers utilizing the technology benefit from the ability to help attract and retain the workforce of tomorrow.

Click here to learn more about Visa Direct and its real-time payment capabilities.


1Actual fund availability depends on receiving financial institution and region.
2This research was commissioned by Visa and conducted online by Directions Research, Inc. from Dec 5, 2019 to Jan 6, 2020. The 2,326 respondents were gig workers, from the U.S., Canada, the U.K., Ireland, France, Spain, Poland, Ukraine, Russia, South Africa, India, Singapore, Australia, Brazil, Peru, and Colombia
3Based on Payactiv usage data from a representative sample of more than 16,000 users from November 2019 through June 2020.
4PYMNTS/Visa ‘Road to Recovery: Mainstreet SMBs and Closing the Cash Flow Gap’ Report, July 2020
5PYMNTS/Visa ‘Road to Recovery: Mainstreet SMBs and Closing the Cash Flow Gap’ Report, July 2020
6PYMNTS/Visa ‘Marketplaces as Retail’s New Front Door’ Report, August 2020
7Visa Annual Report, 2020

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