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To come out ahead, PayPal must address the key aspects of providing solid security and timely payments — but without the look of an 'alternative' payment company designed to only serve the gig market, according to new research done by Netfluential for PayPal.
"There was a need for a payments company to help these freelancers look more like a legitimate business, as that was a basic reason in a lot of countries for them not being paid," said Melissa O'Malley, director of global initiatives for PayPal.
Being considered "legitimate" in these cases would have more to do with carrying on a professional appearance with invoicing and payment options, as opposed to being viewed as a business that doesn't warrant payment priority.
Netfluential surveyed 1,000 freelancers, or those about to become a freelancer, in the U.S. in October of 2017. It was part of a group of 22 similar reports, reflecting markets worldwide and seeking to reveal the nature of the gig economy and the challenges of handling its payments.
Six in 10 freelancers say they try to put their best foot forward by using some form of account software to organize payments received and issue invoices.
From an ease of payment standpoint, PayPal fared well as 85% of freelancers globally said PayPal was the most common method to withdraw funds from freelance platforms they use, such as freelance.com.
"Some of the freelancer platforms, where they post their availability and businesses will go to find freelancers, will provide their own payment method," O'Malley said. "But many freelancers decide they want to get paid directly, whether through their invoicing, PayPal, a P-to-P option or checks."
PayPal is a payment option on many platforms, but can also be the account a freelancer will prefer to receive and reconcile payments.
Overall, freelancers in the U.S. indicated that 54% of their payments came through PayPal, while 34% came as checks and 30% as transfers to their bank accounts. Other methods included credit or debit cards at 28%; through the freelancer platform at 24%; by PayPal's Venmo at 18%; with other online payment methods at 17%; and bitcoin or other cryptocurrencies at 11%.
In gauging the pain points for freelancers, PayPal found that concerns about security remain high amongst the global freelance workforce, with 47% of them citing security as an important factor when choosing a payment method. In the U.S., security was the main concern for 44%, while speed of payment was at 38%.
While viewing freelancers as generally optimistic about their future, the report did note that irregular income remains the biggest challenge for 50% of those surveyed in Hong Kong, Russia and South Africa.
One area in which PayPal sees an opportunity is in helping U.S. freelancers spread their wings with more international business. Currently, 97% of the freelancers have domestic clients, but only 58% have any international business.
"We talk a lot about this as a huge growth opportunity," O'Malley said. "If an online business is not selling physical goods or dealing with shipping, it is a huge community for them to look at being able to grow their business."
Those are the types of insights PayPal gains through the research, O'Malley added. "It helps us better reach them and understand what to talk to them about," she said.
