Gig economy opens a door for instant issuance
Stripe and Adyen are among the best known and most VC-friendly firms that enable quick account onboarding for gig economy supply chains — but a lot of competitors are gunning for their position.
A Salt Lake City firm called Galileo has built an API to enable instant issuance of digital payment card accounts for specific business types such as fintechs, gig economy companies and challenger banks. It hopes to get a boost from Mastercard’s network effect.
Galileo uses a dashboard, sandbox, and production environment in which other companies can build white-label cards and accounts. Galileo has relationships with more than 20 card-issuing banks and uses an interchange revenue sharing model for instant issuance clients.
The instant issuing program will be integrated into Mastercard Accelerate, a program the card brand launched in October to provide fintechs with extra technology and guidance to hasten growth.
“The gig economy is a perfect application for this type of product,” said Clay Wilkes, CEO of Galileo, who also envisions e-commerce and marketplace businesses among his target market. The instant issuance product is at the launch stage, so firm did not name any clients or users.
Mastercard did not provide comment for this story by deadline; the card brand positions Accelerate as a financial inclusion initiative to boost payment technology development globally.
Companies that employ contractors have different payroll needs than traditional companies, and there are also complicated supply chain payment processes.
That's attracted developers such as Extend, which offers virtual cards that provide a Venmo or Zelle-style experience for gig economy workers and expense management. Extend adds a user experience that's tailored for contract workers instead of consumers.
“There is certainly a growing demand for modern card issuing capabilities spurred by the growth of gig economy companies, marketplaces, and other businesses that need not just the ability to accept, but also to make payments,” said Zilvanis Bareisis, a senior analyst at Celent, adding a rideshare company might issue its drivers a card and make their earnings available instantly to them via that card.
There's a number of new entrants to service this space, including Marqeta, Adyen, Rapyd, and others, Bareisis said.
Bareisis says the product is not true “instant issuing” in the sense of personalizing and printing a card in a bank branch. “More recently, people refer to ‘push provisioning’ or being able to generate a card-based token and provision it into a digital wallet,” Bareisis said.
The challenge of managing business payments for the gig economy has benefited financial firms of all sizes. JPMorgan Chase, for example, has found that gig economy companies that rely on drivers, such as delivery or ride-sharing companies, have a different rate of wage growth than companies that lease tangible assets such as property — fitting a work sharing or room leasing model.
Large gig economy companies such as Uber have used information on file for enrolled accounts to speed card issuance. Barclaycard and Uber issue a Visa card in which customers sign up directly in the uber app, and can track payments and incentives within Uber's app.
Uber has also worked with Adyen to adopt PSD2's requirements for improving authentication. Stripe's work in faster issuance for contract workers include a collaboration with Cross River Bank to support debit push payments through Mastercard Send and Visa Direct.
The gig economy firms have also invested directly in new payment technology to support payments for both drivers and consumers.
Grab has added technology development, hotel management and prepaid accounts, as well as a collaboration with Zhong Insurance that offers products and premium payments for both drivers and insurers. Lyft has acquired DataScore and YesGraph to support referrals and other data management.
Wilkes says his firm’s goal is to have an account up and operational a few minutes or hours, using the client startup’s information, the bank relationship and Galileo’s API to streamline issuance. "We want to improve upon the weeks it may take otherwise," Wilkes said.