Out of the 7.3K+ community of FinTech startups that we follow on MEDICI, FinTech’s global knowledge network, close to 19% are payments startups. A highly fragmented segment of payment solutions creates obstacles for mass adoption of any particular service unless we talk about well-established, known leaders.
About 1.3K+ payments startups around the world offer all kinds of solutions for anything related to payments – P2P, bill payments, POS, payment gateways, etc. While the vast majority of startups are at the very beginning of their journey, dealing with massive uncertainty and tightening competition, some power players were able to find their prominent place in the whole ecosystem.
Hyperwallet is one of those interesting companies that has been focusing on the gig economy and gig workers – people who chose to efficiently utilize every asset in their possession. Gig workers have their own obstacles to overcome when it comes to financial services, and this time, we are speaking with the company that took a comprehensive approach to serving its target audience. Simran Singh, the Director of Business Development and Strategy at Hyperwallet, answered our questions on the gig economy as well as shared Hyperwallet’s vision on the present and future of payments.
Simran has more than five years of experience in the on-demand economy and graduated as a Palmer Scholar from the Wharton School of Business. He also holds an undergraduate degree in Computer Science and Mathematics from the Indian Institute of Technology, Delhi.
Elena Mesropyan: Could you tell us about the gig economy and gig workers – who they are, what services they supply to this economy, and what percent of their overall income the gigs represent?
Simran Singh: The key premise of the gig economy is to increase utilization of different assets: the car parked in your garage, the vacation home that you own, and – most importantly – your time. Time is an asset available to everyone, from people with full-time skilled jobs to the unemployed. In the past, the popular perception of contract workers has been that they're unskilled workers who have struggled to get full-time jobs and are turning to part-time work to make ends meet. Obviously, the freelancer identity is more complex than that, and it's constantly evolving.
Fueled by the rise of marketplaces and on-demand services in the gig economy, we’re now seeing an educated, middle-aged population turn to gig work to supplement their full-time income or replace their nine-to-five jobs. They're drawn by the flexibility that these gigs offer.
Gig work can include everything from driving for Uber or freelancing on Upwork to managing a rental on HomeAway or delivering for GrubHub. A study conducted by Hyperwallet earlier this year found that 47% of gig workers receive more than 40% of their income from gig economy jobs. There is a massive shift happening with how people earn, and we expect to see this percentage rise as more workers turn to the gig economy to supplement or replace their current income. We're calling this trend the “Earning Revolution.”
Elena Mesropyan: What are the hallmark complexities faced by gig workers, and how does Hyperwallet address those complexities?
Simran Singh: The change in how we earn has given gig workers the flexibility to pursue work only when they choose. But while gig workers have more freedom than their nine-to-five counterparts, it takes longer for freelancers to receive those earnings. Our Payday in America study found that 28% of 1099 workers wait three to four business days to receive their payment, while 15% wait more than a week. We also discovered that 81% would do more gig work if they were paid faster. So, while marketplaces make it incredibly easy to earn on their platform, there's still a lot of friction when it comes to actually receiving those earnings in a timely fashion.
Hyperwallet's payout platform can put payees back in control of their funds by providing a diverse range of fast and convenient payout methods, as well as digital tools – whether it's a mobile app or online dashboard – that give gig workers greater oversight of their earnings. We also offer integrated support features like 1099 tax services, business expense management, and payment delivery tracking to help gig workers get more out of their earnings.
Elena Mesropyan: Why is the payout process so essential to success in the gig economy?
Payouts remain one of the most significant challenges faced by companies operating in the gig economy.
For one, slow payments can be detrimental to worker efficiency. Take a car-sharing driver: they're responsible for buying their own gas, oil changes, and so on. If they need to fuel up and they haven't received their earnings from last week, they're hard-pressed to supply the marketplace, even if they want to. Another key point is competition amongst gig economy players. There are so many independent earning opportunities available now that it's hard to choose. What's going to help platforms attract and retain gig workers is the user experience, and – more specifically – the payment experience. Freelancers don't want to wait for a check in the mail. After they've completed a task, they expect to be paid within the day. Companies that can't meet that expectation are going to have a difficult time keeping talent on their platforms. Gig platforms need their supply-side users to ensure transactional stability and platform growth, and worker payouts are a large piece of that puzzle.
Elena Mesropyan: Having developed a comprehensive suite of payout solutions, what do you think of a fragmented payments market with a multitude of single-purpose solutions?
Simran Singh: It's true that the current payments ecosystem is fragmented. When a company needs to make payouts to globally-dispersed recipients in a range of currencies and methods, the market becomes even more complex. Some organizations choose either to cobble together multiple single-purpose payout solutions or to build an in-house solution from the ground up, but these solutions inevitably lead to frustrations in compliance and KYC. Hyperwallet alleviates that administrative uncertainty and reduces the risk for clients trying to navigate the global payments market. We also provide a high level of transparency, which a fragmented combination of single-purpose solutions cannot provide.
Elena Mesropyan: How will the payments market look like in 5-10 years, in your opinion? What underlying technology, business models, or payment interfaces should we expect to take over?
We see a clear trend in the payment market towards the simplification of business-initiated payments, primarily driven by the user experience in the peer-to-peer payment space.
This is making people question the status quo in the B2B and B2C ecosystems. "Why do I have to wait for five days to get a payment? Why can’t I see where my payment is? Why can't I choose my preferred method of transferring money? Why do I have to pay so many fees?" Hyperwallet has been at the forefront of bringing speed, transparency, and low costs to business payouts, and those qualities are only going to become more expected over time.
There is a lot of hype around crypto and virtual currencies, but we don’t see them becoming mainstream anytime in the next 5-10 years. A lot of the infrastructure required for the success of these payment mediums is currently missing, and it's going to take years for that to be built out.
Elena Mesropyan: Cybersecurity represents a great deal of issues these days. I’ve encountered an interesting insight on the matter recently: people treat cybersecurity as a finite problem that can be solved, rather than as the ongoing process that it is. Do you agree with this statement? How does Hyperwallet ensure the continued security of its payments solutions?
Simran Singh: Cybersecurity is sort of like an arms race: both parties – hackers and corporate security – are constantly trying to get a leg up on the other.
Just because you're covered against an existing cybersecurity threat doesn't mean that you're fully protected, because new methods of breaching networks and systems are coming to the fore all the time.
Hyperwallet's success is premised on the reliability and security that we provide to our customers. Our security and compliance teams work with the some of the best resources to help ensure that we stay ahead of existing and emergent threats. Because we've built our product on a modular architecture, we're able to respond to these threats more easily without sacrificing service quality or availability for our customers.
Elena Mesropyan: Could you tell more about Hyperwallet’s loyalty module? Earlier this month, Hyperwallet announced a collaboration with Dosh. Could you share the details and explain what this partnership will mean for your customers? Simran Singh: Our integrated loyalty tool provides Hyperwallet clients with an easy and effective way to motivate positive payee behaviors and improve platform retention, enabling users to earn rewards by performing particular tasks. For example, a company might offer a reward when a payee spends a certain amount on their branded prepaid card. The benefit here is both increased payee affinity with the platform (after all, who doesn't love free stuff?) as well as the word-of-mouth exposure generated by using the branded card. We recently announced some enhancements to the program, including an expanded rewards catalog, improved user interface, and new professional services intended to support independent workers. Through partnerships with Intuit, TelaMed Access, and LegalZoom, we’re now able to offer a range of independent business services to Hyperwallet payees. This includes access to financial management and tax software, discounted medical plans, and on-demand legal support and advice. With the addition of these business services, we hope to relieve some of the anxiety that can come with being an independent worker. We also announced a collaboration with Dosh, a cash-back mobile app that searches for deals and offers on behalf of consumers. Now, loyalty-enabled payees can use Dosh to earn extra money on everyday purchases, as well as discounted offers on some great products and services. It's all about helping these individuals hold on to more of their money.
Elena Mesropyan: What are some milestones you have for Hyperwallet in the year ahead? More features, technological advancements, partnerships, etc. Simran Singh: We’ve had a number of exciting announcements recently, including opening our new London office and launching our Asia-Pacific expansion in Sydney. We've also made some significant improvements to our platform, with a major portal refresh and new additions to our financial network. We have some exciting new clients to announce, but we'll have to wait until the ink is dry. Suffice to say that 2017 will be a big year for Hyperwallet, and we'll continue the hard, behind-the-scenes work that has made our platform so successful.
Elena Mesropyan: Thank you, Simran!
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