Payments

A Force To Be Reckoned With: Cross-Border Workforce Payments

With high inflation rates leading to a drop in real wages worldwide, the livelihood of workers and businesses increasingly depends on seamless workforce payments.

Key takeaways:

  1. Mastercard's new borderless payments report - 63% of international gig workers feel the economic climate has negatively impacted their finances
  2. Enterprises must address the payment needs of their global workers: keeping transaction and personal data secure (43%) and delivering funds in 24 hours or less (39%).
  3. Papaya Global addresses the needs of enterprises and workers with proprietary technology that accelerates the payment process and ensures bank-level security.

Over the past few years, labor markets have shown incredible resilience. Though the global economy has faced shock after shock – COVID-19, the war in Ukraine, and an energy crisis – OECD unemployment is at its lowest since the early 1970s. Labor markets even pushed up nominal wages, but keeping up with high and persistent inflation rates proved too difficult, leading to a fall in real wages in almost all OECD countries.

The resulting cost-of-living crisis is one of the main themes in Mastercard’s new borderless payments report. The report sheds light on the experiences of more than 11,000 survey participants in 15 countries, including 1,309 gig workers and freelancers who have either sent or received cross-border payments in the past 12 months.

Key findings from the survey include:

  • 63% of gig workers feel the current economic climate has negatively impacted their financial situation.
  • 61% of gig workers had to use savings to cover everyday expenses.
  • 79% of gig workers worked side jobs in 2023. Gig workers typically use the extra earnings to pay for living expenses (60%) and build savings (52%).

Arrested development

Another sector highlighted in Mastercard’s report is SMEs. According to the World Bank, SMEs represent about 90% of businesses and more than 50% of employment worldwide. By 2030, the World Bank estimates, 600 million jobs will be needed to absorb the growing global workforce, making the development of SMEs a high priority.

Most SMEs are bullish on their economic development. Of the 2,333 businesses surveyed by Mastercard, two in three indicate that their revenue rose in 2023 compared to the year before. Enterprises are also taking an increasingly global approach; 75% intend to do more business internationally in the future, and 65% plan to source more suppliers, partners, and workers across several countries – making the need to properly manage and pay a global workforce more crucial than ever.

Paying international workers – especially gig workers, who account for up to 12% of the global labor market – requires a solution that addresses the challenges of cross-border payments. Based on Mastercard’s survey, the most crucial challenge is keeping the transaction, personal data, and financial information secure (43%), followed by delivering funds in 24 hours or less (39%).

The need for speed is understandable; cross-border workforce payments are notoriously slow. The reason is simple: payment service providers (PSPs) typically deliver wages and salaries via traditional rails, leading to slower processing times and often resulting in late payments. Papaya Global, the only fintech designed for global workforce payments, took a different route. 

Relying on partnerships with tier-1 banks such as J.P. Morgan Chase and Citi, Papaya established the first payment rails optimized for global workforce payments, and developed a proprietary technology: the Workforce Wallet. Using the Workforce Wallet – the latest innovation in Papaya’s suite of enterprise-grade solutions – accelerates the payment process by 80% and offers a 95% same-day delivery.

A safe space

Papaya’s speed doesn’t come at the expense of security. As a regulated financial services company, Papaya keeps funds in segregated client money accounts (CMAs) and holds money transfer licenses across the globe. Money transfer licenses are issued by local governments, which means Papaya’s handling of client funds is subject to strict regulation, ensuring the highest level of trust.

Banks are typically more associated with trust than alternative payment providers. Thanks to its partnerships with J.P. Morgan Chase and Citi, Papaya Global enjoys similar confidence levels. Partnerships with banks are hard to form and easy to lose; building those relationships can take years of thorough due diligence, but they can unravel in no time if the bank believes the partner’s risk threshold to be too high.

From Papaya’s earliest days, being risk-averse has always been our top priority. We perform Know Your Customer (KYC) and Anti Money Laundering (AML) processes for each new client and worker being paid via our platform – and run rigorous screenings for every payment, every cycle, while our clients’ funds are segregated and safeguarded in designated Client Money Accounts.

In addition, Papaya’s platform provides the highest level of data security. It supports SSO, complies with GDPR, holds SOC 1 Type II and SOC2 Type II audit reports, and is certified by CSA. It also offers fully customizable roles and tailor-made approval chains so that only the right people can access sensitive information, providing SMEs with what they need: secure cross-border workforce payments.