gig economy

Management / Payback time for gig economy workers

Payback time for gig economy workers

Getting paid as a gig economy worker or a newly arrived migrant new is never easy to begin with - and outdated payment systems or the lack of a bank account can make the process even slower and clunkier.

“Everybody is frustrated,” says Andrzej Horoszczak, CEO and founder at Billon. “There is nobody happy with this system, the sales guys are frustrated, the workers are frustrated, even the accountant is frustrated.”

According to Horoszczak the problem is there is not a customer-centric, centralised approach to payments. Data has to be retyped over and over again into different systems and there are a multitude of intermediaries involved.

“Every single middleman creates cost and complexity,” says Horoszczak. “Businesses want to interact directly with the end customer and every single intermediary is a data filter.”

He describes it as a "dinosaur" way of doing business, adding layers to create a pointlessly complex system. Billon has been using blockchain to cut these processes out and simplify the direct payment of people working in the gig economy.

Billon's blockchain technology works by replacing all the different back-office processes with one IT system.

The company ran a pilot using its technology, with an insurance company that employed independent agents. For three months, 3000 agents were paid using the new system, while another 3,000 were paid via the normal method of bank transfers. The group paid via blockchain were rewarded immediately, while the bank transfers were much slower.

“The difference was a 16 per cent sales increase when the reward was immediately after the job,” he says. “People were happier and less frustrated.”

Horoszczak points out that, like the insurance agents, no one wants to wait longer than they have to get paid for the work they've done.

“It is about getting the right amount of money to the right person as quickly as possible,” he says.

He sees a huge market for this type of payment. In the European Union, he states, there are about 70 million people working odd jobs, and huge numbers working in irregular employment. All of them are suffering from these kind of delays.

Another case study by Billon - this in conjunction with tobacco company Philip Morris showed there was a 30 per cent cost improvement because some of the operations involved were no longer necessary.

It makes the settlement and clearing - the parts of the process that make it slow and expensive - redundant, points out Horoszczak.

According to Horoszczak, to maintain a retail business customer costs banks about £300 per year. They have to recoup this money through fees.

“The only way strategically to move forward is to change the technology backbone,” he says.

Billon is also working on a new platform to make people who don't aways have access to bank accounts - such as migrant workers - become more financially inclusive.

It works through virtual IBAN, which allows employees to have their money redirected to a physical bank account elsewhere.  The scheme is being piloted with a mid sized bank.

“For migrant workers to open a bank account it is a hassle,” he says. “It is not easy and expensive because everybody knows they will be here for a few months and they will pay huge fees. We are essentially allowing them to get their salary and pay a few bills.