The gig economy gets the sandbox treatment

'Gig' companies often run into a snag when trying to integrate payments for a complex network of contractors, freelancers and other small clients, a challenge Jeff Shea hopes open development techniques can conquer.

"For marketplaces, for associations, etc., there is a pain when they need to add payments and not take away from the user experience," said Shea, CEO and co-founder of Payline Data, a Chicago-based merchant acquirer, payment facilitator and technology company which this spring developed an application programming interface for B-to-B uses called Payline I/O.

Through technology companies like Stripe, APIs have become a popular way for e-commerce merchants to integrate payments into their websites or mobile apps by using pre existing software tools to build their own payment gateways.

Payline is targeting businesses such as software developers, Uber-style "sharing apps," merchants and other companies that have complicated transaction needs such as timing, structure, compliance and risk management.

"It can drastically vary by users," Shea said. "If it's a subset of developers who build products for small to medium businesses, for example, they have innovative software but can run into a pain point in onboarding their clients."

Payline I/O has a sandbox testing environment and uses dynamic funding, or a way to control the timing of settlement and funding. Instead of a static timeframe, dynamic funding allows software platforms to settle funds after a trade show or other special event.

Users can also settle funds to sub-merchant bank accounts "on the fly" and configure billing, fees and payment splits to accommodate a range of situations and pricing. Additional services are risk management, anti-money laundering and automatic credit card update features to replace lost or stolen cards.

Payline has added new mobile acceptance technology over the years, and is upgrading its development tools now to address specific opportunities, according to the company. There's an expansion of the payment facilitator market, according to Shea. Merchants and ISOs are eager to keep up with changing digital payment, sales and shopping models, and are eager for a fast integration to onboard new sellers, such as contractors in an Uber-style sharing company.

The company did not release details on clients or users of Payline I/O by deadline, but the company is vigorously pushing the technology for the gig economy, where a centralized user is vital as participants is as vital for contractors as it is for consumers.

"The payment and onboarding process can often take away from the value for these companies," Shea said.

Onboarding sellers and contractors and enabling payments in the gig economy is attracting a lot of venture investment and attention from Mastercard and Visa. The goal of companies such as Payline, WePay and Tipalti is to address this space by speeding onboarding and providing flexible payment options that can quickly change along with business models.

The growth of this business segment and its complex funding and payments needs lends itself to the trend to add speed to payments, according to Linda Coven, a senior analyst at Aite.

"[Contractors] are an excellent use case for faster payments," Coven said. "If you are talking about paying wages for their hourly work, same day ACH is an ideal tool, allowing the calculation of hours up to the day of payment. As long as the business making these payments has access to a bank’s ACH online or mobile service they can enter the data necessary to make these payments."

For contractors having to purchase supplies without using credit, the new real-time payments from The Clearing House may prove to be useful once an application is developed to allow for the initiation of the payments and the supplier can accept and apply the payment, Coven said.