What's Happening?
A recent study conducted by Thunes, a Singapore-based payments network, in collaboration with Juniper Research, has revealed significant economic challenges faced by gig workers due to fragmented cross-border payment systems. The survey, which included
over 6,700 participants across ten major markets, found that one in three remittance recipients struggled to pay for essentials like food, rent, or utilities because funds were trapped in disconnected systems. The study highlights a 'fragmentation deadlock' where domestic payment systems clear in real time, but cross-border connections lag behind. This issue is particularly acute for gig workers, with 11% reporting lost job opportunities due to payment delays and fees, compared to 4% among non-gig workers. The study also notes that 63% of gig workers engage in international transactions, making them more vulnerable to income volatility.
Why It's Important?
The findings underscore the critical role of efficient payment systems in the global economy, particularly for gig workers who rely on timely international payments. The study's results highlight a 'Digital Mobility Divide,' where access to fast and reliable payments is essential for participating in the global labor market. The lack of such access not only causes inconvenience but also reduces earning potential, affecting economic stability for gig workers. The study also points to broader regulatory challenges, as the G20 aims to reduce remittance costs to below 3% by 2030. However, progress remains slow due to regulatory compliance costs and fragmented domestic clearing systems. This situation presents both a challenge and an opportunity for payment operators to address infrastructure gaps and enhance their service offerings.
What's Next?
The study's findings may prompt further discussions among policymakers and payment operators to address the identified gaps in cross-border payment systems. As interoperability frameworks advance in regions like ASEAN and parts of Africa, there is potential for developing a globally coherent interoperability layer. This could help reduce the 'friction tax' on the global economy and improve the financial well-being of gig workers. Additionally, commercial payment operators may need to reassess their strategies to ensure reliable cross-border payouts, which are crucial for platforms like Uber and Deliveroo that depend on gig workers.
