On-demand payment innovation at the heart of digital “new normal”
The COVID-19 pandemic has delivered industry changes in rapid time. What it has also managed to do is highlight processes that are ripe for innovation.
As a consequence, new technology is solving payment pain points that can be the bane of gig workers and small businesses.
Shari Krikorian, Mastercard
“We are seeing a rapid shift to digital,” says Shari Krikorian, senior vice president at Mastercard. “This was happening before COVID, but the pandemic has accelerated this transformation.”
Across the globe, consumers and small businesses are migrating way from cash in favour of safer ways to transact, such as using contactless cards or smartphone payments. And while stores and restaurants have been closed, e-commerce has increased massively.
Meanwhile, and somewhat as a result of people working from home, parts of the gig economy have seen growth during the pandemic, says Krikorian.
“For example, freelance job postings have increased by 41% in Q2 2020 vs. Q2 2019, and there’s been a proliferation of on-demand services.” These include home delivery of goods and food bought online and odd jobs.
Gig workers and small businesses
But now, more than ever, these gig workers need fast access to their earnings. “An Uber Easts driver can deliver ten meals in a day and earn $100 dollars delivering them.
The driver may not be able to wait until the end of the month to get those funds,” says Krikorian, “because he or she needs that money to fill up with gas or to put food on the table.”
Small businesses are also reeling from the impact of the pandemic. “These firms are the lifeblood of our communities and our economies. In fact, they represent up to half of the GDP around the world,” says Krikorian. “And 75% of them indicate the pandemic has negatively impacted their cash flow.”
In turbulent times, it is often new technology that helps workers and businesses adapt. A product Mastercard provides to gig platforms, Mastercard Send, enables them to access their earnings on demand using their debit card.
Mastercard Send can also enable business owners to receive their proceeds in near real-time using just their debit card. In both cases, fast and convenient access to money builds resilience by allowing gig workers and small businesses to meet their most important needs.
To illustrate the point, Krikorian provides the example of a bakery.
“Jessie the baker can rapidly collect her proceeds from the day to pay her one salaried worker or purchase ingredients for the next day. She can instantly use her takings from the day to grow her business, knowing with confidence that the funds are in her bank account and available for use.”
Loans for the long term?
Mastercard Send can also support instant loan disbursements, another on demand use case.
“Continuing with the bakery example, let’s say Jessie is so amazing she has crowds out the door,” says Krikorian. “The little space she has isn’t big enough to accommodate the growing business. She needs working capital. Alternative lenders can step in to help out.
“She can apply for and qualify for a loan and get a very quick decision with the use of real-time data. Once that’s approved, funds can be dispersed into her bank account via her debit card. Now she has the funds and can grow her business to serve the demands of her customers.”
The pandemic has caused an uptick in payments digitization. But the question remains: will these digital trends persist in the long-term?
Mastercard research suggests they will, with nearly seven in ten people believing the changes are permanent.
Krikorian agrees: “There’s real value in the convenience and peace of mind that comes with being able to access one’s earnings anytime, anywhere.
The pandemic has reinforced the need for payment solutions that provide security and immediacy, and we suspect those needs will remain at the heart of a digital ‘new normal’ in the future.”
For more visit Mastercard
