Startups Must Improve Their Digital Payout Abilities to Attract the Best Global Talent
High performers are 400% more productive than average workers according to a recent study of more than 600,000 professionals.1 For startups, that’s a productivity statistic that shows how important it is to expand your ability to pay overseas contractors so you can find and recruit the best talent.
More than a third of the US workforce freelanced in 2019, adding nearly $1 trillion dollars to the economy.2 Contractors and gig-economy workers can help startups reach growth and investment goals while managing full-time headcount and payroll costs.
But many opportunities are being missed to pay overseas contractors in fast, affordable and seamless ways. Without a solid strategy and process for digital payouts, contractor payments can become a drag on time, resources and cash. And small AP teams can soon become frustrated with payments complexity.
Here are some common payout methods that startups and fast-growing organizations need to understand in order to access the widest talent pool:
- Electronic Funds Transfer (EFT): A traditional bank transfer is often seen as a safe bet for paying overseas contractors, as no additional software or apps are needed. Fees are involved for both parties.
- SWIFT or IBAN Transfer: The SWIFT network helps transfer payments from one account to another, through a series of intermediaries. It’s highly secure and reliable, but can be slow and costly. Similarly, IBAN is used within the EU and Switzerland.
- eWallet Payouts: In regions with high mobile adoption but underdeveloped banking infrastructure, like the Middle East and North Africa, an ewallet can help startups push payments to contractors and gig economy workers, or use a card-issuing partner to create virtual cards to push funds to beneficiaries.
- Push-to-Card Payments: A push-to-card payment, or Original Card Transaction (OTC), allows funds to be quickly received and disbursed to a contractor’s card.
- Cash Payouts: Uber’s understanding of unbanked consumers led it to introduce local cash payouts in Asia, Africa and South America in 2015, causing exponential growth in those markets3.
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How Startups Should Pay Overseas Contractors: Speed Matters
A survey of 11,000 workers in the US, the UK, Germany, France, Spain, Sweden, Japan, India, Indonesia, China and Brazil, found up to 10% of workers in mature economies — and more than 30% in developing ones — use gig platforms as an income source4. And gig-economy workers typically want faster payouts. Some 65% of gig workers have received same-day pay, while 75% of contractors said they would be more loyal to a company that offers quick pay then one that doesn’t5.
This is why startups need to get payouts right to ensure they attract and retain in-demand overseas contractors. A recent poll6 of these workers showed:
- 54% say payments take too long
- 45% of their clients don’t honor payment terms
- 30% are frustrated by credit card fees.
Startups can capitalize if they address these frustrations — and the benefits of digital payout methods can pay off domestically too. For example, one payment methods study7 found North America’s economy could save up to US$2.4 billion, by moving from checks to digital payments.
When Startups Pay Overseas Contractors Using Fast Processes and Prefered Local Payment Methods, It’s a Win-Win
Businesses must entice workers’ with flexible payment options and fast payout times to win the race for contractor talent while managing payout costs. Ultimately, the best way to pay overseas contractors, is using the methods they prefer.
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