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How Payment Facilitators are Fueling the Gig Economy

Payment Aggregators are helping fuel the rise of the Gig economy

Times, they are a-changin’.

It feels like every generation has had a moment of great sea change, a point at which, from there on, nothing would ever be the same. The current generation’s moment seems to rise from the gig economy and solutions like GlobalOnePay’s Payment Facilitator Connect is helping to pave the way for their success. 

From making rooms available on services like AirBnB, to driving for car services such as Uber or Lyft, to performing functions that may have previously been done by in-house staff on services like TaskRabbit, Upwork or Fiverr, there are a multitude of ways for both those seeking employment and those seeking employees to find one another. At the heart of all these exchanges for service is where payment facilitation plays a big role.

It’s a seemingly simple idea, payments need to be distributed to various parties – the consumer hiring the service, the person fulfilling the service and the intermediary that connects them all. While it sounds simple, payment distribution in the era of the gig economy is quite complex. To enable payments distribution in an efficient and smooth manner, many companies in the gig economy exist as payment facilitators. They are also known by other terms, such as Payment Aggregator or Payment APIs. Payment facilitators serve as the payment distribution platform so that all parties can be paid. For example, Lyft allows those seeking to get a ride downtown to be paired with an available driver near them. In this case, Lyft facilitates the payment from the rider to the driver while also earning some revenue for the service.

Ridesharing services are growing more popular as consumers like the ease of paying for these services on their mobile devices.

For companies such as Lyft to flourish, they often rely on payment service providers that offer a version of payment facilitation. These payment processing models are the main reason why these types of industries are flourishing, causing millennials to turn to these gigs in droves. Consumers are switching more and more to these types of services due to their efficiency and affordability. For those seeking employment or ancillary income, these gig services offer flexibility to set their own hours while getting paid weekly or by project. 

So too are SaaS, ISVs and web app developers looking for ways to eschew standard business models and – for many – payment facilitation is the best method to achieve their goals. Becoming a payment facilitator provides greater simplicity and flexibility than standard payment models, while also offering support and other customization features for users and clients they sign up. Businesses who invest in becoming a payment facilitator see greater profitability and rate of return, due in part to the flexibility, support and customization these payment models provide.

While acting as a payment facilitator can help lead a business to great success, it comes with some inherent challenges. There is a web of legal requirements and regulations surrounding payment facilitation which can be expensive and time consuming to navigate. In a similar vein, setting up a payment facilitator system or payments API is often capital-, time-, and personnel-intensive. Because of some of the inherent risks of acting as a payment facilitator, namely surrounding fraud, chargebacks or other cases of financial dissolution, a company that chooses to go this route on their own might find that they must hold excessive amounts of cash – no small feat for a small, growing company.

Additionally, because of the development time necessary to build and maintain a payment API, the engineering costs can be exceptionally high as well. Finally, as mentioned above, the compliance requirements surrounding payments are such that it is necessary that a full-time staff be on-hand monitoring payments and conducting risk-analysis to ensure the current infrastructure is safe for both parties for whom the payments are being facilitated. Knowing the risks associated can also be tricky, as scammers and swindlers are constantly changing tactics and probing businesses for new weaknesses. 

For budding entrepreneurs in the Gig Economy, navigating the complexities of becoming a Payment Facilitator is difficult.

This is where services like Connect Complete from GlobalOnePay come to the rescue. Connect reduces entrthe risk, costs, and time of becoming a payment facilitator, without the need to hire new staff or raise large amounts of capital, because all the work is done for you! In six easy steps, your business could be set up and ready to join other SaaS or software providers, ISVs, and app developers that are rapidly enabling payment acceptance through this platform.

Six Steps to Become a Payment Facilitator

  1. Once you join our program, we’ll do all the work for you to become a payments aggregator. Our all-in-one payment facilitator solution offers full support includes bank sponsorship, legal framework, card brand registration, reporting, activations and funding.
  2. Customize payment and other preferences, plus track new client submissions and all transaction activities in our Partner Portal.  Our Implementation Team is available to provide assistance.
  3. Integrate client boarding to your website or app via API or a customizable Hosted Application form.
  4. Manage logins, permissions and track all submissions in the Partner portal. Plus receive real-time status alerts.
  5. Approvals, can be processed in near real-time. All submissions are screened to ensure compliance with fraud prevention and financial crime agencies. Once clients are activated, they can begin accepting payments.
  6. Track every transaction including funding, billing and chargebacks through our robust back-office dashboard or via API.

The gig economy is changing the world and payment facilitators are leading the way by creating a solution that is more open, easy and affordable to do business with. Let GlobalOnePay’s Connect Conplete handle all your payment aggregation while you work on changing the world.

Contributor:

Shannon LeDuff

Shannon is currently the SVP Sales and Business Development for GlobalOnePay, a division of Pivotal Payments Inc. His goal is to establish strategic partnerships with sales organizations that specialize in the eCommerce space globally. As commerce shifts online, there is exceptional growth potential that Shannon can help ISVs, SaaS, Marketplaces and platforms tap into, to drive payments into profits.