Ordering your evening meal or weekly groceries online has never been easier. In most cities, you can now order a car from your phone to get you from A to B in a matter of minutes. All of this is made possible by two means: the marketplace technology that facilitates these instant transactions and the gig economy that delivers the end product or service.
A report by KellyOGC last year shows that 84% of employers in Asia Pacific hire or use gig workers, outpacing the rest of the world. This has arguably been one of the biggest workplace trends of the century. In developed countries, popularity has been driven by those looking for flexibility and freedom. In developing countries, it has helped the unemployed onto the job ladder, helping to drive economic growth.
Despite this, one critical issue lingers: payment. The question remains, if it’s so instantaneous to make transactions on marketplaces, why is so difficult to pay workers? One of the biggest barriers is not having a bank account to be paid into. Of 5.7 billion adults on the planet, it’s estimated that 1.7 billion people are unbanked. In the western world, this is hard to imagine, but in some countries obtaining the required documentation and navigating outdated bureaucratic processes make doing so impossible. This is particularly true of economies like China and India where the unbanked are the majority.
Issues like being paid in the wrong currency and hefty processing fees only make matters worse. Whether or not you support the gig economy, a solution to the payment problem should be welcomed, as traditional banking methods are leaving workers worse off.
Last month, Facebook announced its Libra project – a global digital currency powered by technology. Could this be a solution to the problem? With 2 billion users, Facebook has the potential to create one of the largest financial platforms in the world and connect billions of people to one economy. Through Libra, a gig economy worker with a Facebook account will be able to receive payment as quickly as consumers receive products and services from marketplaces. Hypothetically, with Libra, issues like bank account accessibility and inflexibility in payment currencies disappear.
This sounds easy but there are still barriers to overcome. It’s a seismic moment for global finance but it’s yet to be seen how regulators and governments will react and regulate the technology. It’s feasible that not all countries will allow Libra to see the light of day. Facebook was recently grilled by the US Senate Banking Committee on its plans for Libra. France, which chairs the G7 this year, has asked the European Central Bank executive board member Benoit Coeure to set up a G7 task force to look into the regulation of digital coins, such as Libra.
Despite this, the idea of building a payment system into a platform that nearly a third of the world’s population already use, is a positive move for the global economy and gig economy workers in particular.
While the impact of Facebook’s Libra project is yet to be seen, I’m hopeful it will accelerate the conversations and questions on regulation and banking that have yet to be answered on crypto. Even more significantly, if today’s powers that be, particularly in developing nations, open their doors to crypto, we could see the development of these economies rapidly speed up as they’re able to access more accurate data on their growth.
By Paul Henry Familiaran, Head of Southeast Asia at eToro