Cross-border payments startups are exploring the right way to power the future of work

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April 6, 2023
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6 min read
A freelancer sitting behind a laptop with logos cross-border payment platforms like Payday, Grey Finance, Changera, Chippercash, Send by Flutterwave, and Geegpay hovering over him

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On March 29, 2023, Payday disclosed its $3 million seed raise led by Moniepoint, Techstars, and other VCs and angel investors among whom are African founders. In its statement to the press, the startup plans to use this fund to fuel its "future of work" initiative through cross-border payments solutions in over 20 foreign currencies.

Currently, Payday actively plays in the Nigerian and Rwandan markets and offers virtual dollar and naira cards, payment links, local bill payments, and peer-to-peer transfers.

So far, these services have helped freelancers and remote workers who work for international companies get paid in foreign currencies including dollars, pounds, and euros.

Meanwhile, based on complaints gathered from two freelancer communities, the platform has been experiencing glitches, which some believe is the aftermath of its recent massive marketing drive that attracted traffic they weren't prepared for.

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Cross-border payment solutions are becoming more popular in the African fintech space, especially in Nigeria as its use case became highly needed after regulatory moves made paying international bills with local payment options impossible. Hence, these platforms make virtual debit cards and opening foreign bank accounts possible.

Similar to Payday, platforms like Chipper Cash, Lemonade Finance, Geegpay, Grey, Changera, and Send by Flutterwave provide similar services.

Although these platforms have freelancers and remote workers within their target market, only a few are explicit about having a precise focus on the "future of work" as Payday did in its recent funding announcement.

Geegpay and Grey also fall under this group with varying taglines like "Banking services for digital nomads" and "Digital Financial Platform for the Gig Economy".

What is a "future of work" initiative? 

It is difficult to say exactly what Payday's future of work initiative will entail because no official response regarding this had been received as of the time of publishing this piece.

However, the funding announcement suggests that Payday aims to make it easier for Africa's remote workers and freelancers to receive and send payments across borders without worrying about currency exchange or high transaction fees.

The startup might have plans to develop new features to aid access to other financial services, especially since it bears the neobank tag. For instance, Payday Founder, Favour Ori, hinted that the startup would soon consider offering loan services to qualified users.

Aside from this, it is only clear that the startup is very keen on facilitating currency exchange and international payments for Africans anywhere in the world, using London-based fintech, TransferWise as a benchmark.

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Variety is the spice of life and references to the future of work often cover broad topics focusing on the needs of remote workers and freelancers. Aside from payment needs, we have legal and regulatory support, affordable health care, statutory obligations like tax and pension, and other employee benefits.

Still, it appears payment is worth that much attention. Victor Ekwealor, CEO of Flance, believes it's a valid problem to solve, and these platforms have barely scratched the surface of what's possible in the vertical.

Payment, the bane of Africa's gig economy 

A few years back, I wrote about Africa's gig economy's continuous growth to accommodate more players, and how some of its challenges would attract attention from innovators. For instance, a Nigerian startup, Flance, is offering a solution where gig workers can subscribe to plans that make them enjoy employee benefits.

But, payment remains a major challenge for workers in the sector. Besides, freelancers and remote workers often have to deal with unpredictable processing times and currency exchange rate fluctuations when receiving payments from international clients. But the problem doesn't end there.

Sulaimon, a Web3 content writer, has been in the gig economy for over six years and has experienced his fair share of payment challenges particularly accessing his funds or withdrawing them to his local bank accounts.

Although the frustration has eased compared to the early 2010s, this group of workers currently deal with high transaction fees and choose the most reliable and affordable options that meet their specific needs among existing cross-border payment solutions.

A Nigerian product designer who has been active and getting paid on Fiverr and Upwork since 2020 also alluded to this. Currently working two full-time roles with US companies, he stated that although he can receive payment in crypto, the barriers to accessing his funds still exist.

He receives his salary in his Payoneer account from where he converts it to USDT via Binance or moves it to Geegpay or Worldremit where he either uses it for transactions or transfers it to his local bank account.

He, however, mentioned that his options are still limited because some platforms have high dollar-to-naira conversion rates compared to the value they pay out with. Also, having to circumvent several hurdles prolongs the processing time.

In a different case, a freelance content creator had to abandon freelance platforms in 2020 after facing frustration with retrieving funds from his Fiverr account. When she reconsidered this year, she was again discouraged by how long it took the payment platform to complete KYC verification, causing further delays and inconveniences.

Beyond the payment challenge 

Freelancers and remote workers face challenges other than cross-border payment, which platforms claiming to focus on this group need to address.

In 2022, Geegpay by Raenest came to the limelight with a promise of borderless payment for the African gig economy. The platform allows users to open foreign virtual accounts to receive money in USD, GBP, and EURO, make payments in local currencies (including naira, and in coming weeks, Kenyan Shillings, Tanzanian Shillings, and Ghanaian Cedis), and automate employer billing through its smart invoicing feature, among other perks.

Richard Oyome, Geegpay Co-founder/COO, however, said the goal is to help freelancers have the same experience as full-time employees, with more features to drive this in the pipeline.

"Geegpay users should expect new features like Automated Budgeting, Insurance, Global Perks, Tax, and Pension auto-payment," he told me during a chat.

Admittedly, any platform with a focus on the gig economy should not only help freelancers navigate employee benefits but also fulfil their statutory obligations like other full-time workers. Health insurance, pension, and tax, for instance, are ordinarily not included in remote workers' pay, despite their significance.

Ekwealor begs to differ. He argues that there's still a huge gap in payment and it still deserves more significant attention that it's getting. Hence, startups playing in the space should ensure they are ready before adding other features to it.

"On what more they should do, that is dependent on a lot of factors: roadmap, ambition, expertise, resources, and bandwidth. The gig economy is one ginormous ecosystem that continues to grow exponentially with the shift in work culture, and there is a lot of untapped potentials therein. All the aforementioned factors would determine what these current players do when they decide to move beyond facilitating payments," he submits.

But Oyome reasoned that any platform projecting serving the gig economy as its unique selling point should work towards including other beneficial features.

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Taxes are automatically deducted from workers' paychecks, but a freelancer that can't keep track of their income and expenses won't be able to pay taxes accordingly. Platforms like Payday, Geegpay, and Grey should be able to relieve them of this daunting task.

Say a freelancer generates an invoice for a client, gets paid, and uses the money to settle expenses all on the same platform, tax deduction would be easier.

On the other hand, freelance and remote workers often miss out on some benefits and protections that come with traditional employment. Retirement plans, legal and regulatory support, access to workspaces, paid time off, and other perks belong here.

How cross-border payment platforms offer these solutions 

Simply put, through partnerships.

Payday's next plans include a possible partnership with Moniepoint — the lead investor in its seed funding round — and obtaining licences in the UK and Canada.

Geegpay, on the other hand, claims to be taking extra steps to make sure international banks trust its users by being more intentional with its KYC. However, in fulfilling its other obligations, Oyome said the platform is finalising several partnership deals with health, insurance, mobility and logistics, facilities management, and pension providers.

Notably, Geegpay is enjoying the influence of its parent company, Raenest, which provides hiring and payroll solutions for businesses. While getting paid is crucial to working as a freelancer or remote worker — which cross-border payments are addressing already— the potential to solve other problems exists for those that decide to focus on the future of work. They could as well add the "creating a more equitable and secure work experience for freelancers and remote workers" tagline to their description.

Human enthusiast | Writer | Senior reporter | Podcaster. Find me on Twitter @Nifemeah.
Human enthusiast | Writer | Senior reporter | Podcaster. Find me on Twitter @Nifemeah.
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Human enthusiast | Writer | Senior reporter | Podcaster. Find me on Twitter @Nifemeah.

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