The gig economy is taking off globally, and so are the ways companies can pay freelancers using streamlined new channels that cut out intermediaries.
Montreal-based Payment Rails is the latest to join the array of startups specializing in cross-border payouts to independent contract workers, launching a solution this month that leverages Blockchain, Ripple and other fintech innovations to find the cheapest and fastest way to make payments between far-flung parties.
In a niche where gig-economy veterans including PayPal and Payoneer already have solid footholds, Payment Rails aims to differentiate itself in a few ways.
For one, Payment Rails is putting a tight focus on the emerging area of “influencer marketing,” where global brands are spreading money among individuals who use social media including Instagram and YouTube to promote specific products, driving a rapid expansion of payouts to hundreds of thousands of participants, according to Tim Nixon, CEO, who co-founded the company in 2015.
"If the industry estimates are correct that suggest influencer marketing will grow to become a $5 billion to $10 billion industry in the next five years, we’re perfectly positioned to grow with that market," Nixon said, noting millennials are powering the trend. "Younger adults are earning money through new business models all over the world, and payments technology needs to evolve to support them."
Other areas driving fresh demand for payouts include affiliate marketing, where workers earn commissions for generating sales leads and referrals and online marketplaces for a wide range of services that are typically delivered online, like web, design and content development, he said.
Payment Rails also sets itself apart by promoting the real-time delivery of funds directly to recipients’ bank accounts instead of an e-wallet, which is increasingly important to businesses, according to Nixon.
"Many businesses feel like they don’t have control over the payout method when they’re using an e-wallet, which creates the opportunity for third parties to make changes or add fees, and they prefer the simplicity of sending funds directly to a bank account rather than going through an intermediary," Nixon said.
Payment Rails’ approach enables companies to pay workers directly through ACH bank deposits in 60 countries that have the largest gig-economy payout volume in Europe and Asia, and by using a combination of bank network systems and wire transfers, it can reach 220 countries altogether.
A white-label, API-first platform enables Payment Rails to connect companies to connect to the service within about 30 minutes, and businesses may add their own brand names to emails supporting the payouts, which Nixon said is increasingly important to businesses.
Recipients also see the payer’s name on bank statements describing the payment—versus that of a third party—which eliminates confusion from users who typically receive payments from multiple sources, he said.
Payment Rails keeps costs at about $1 per payout transaction, using a combination of fintech tools including blockchain, artificial intelligence and machine learning to optimize transaction-routing based on speed, cost and foreign exchange rates, according to Nixon.
The company is finding customers through a direct sales force, an approach Nixon said is proving to be effective so far, with 30 companies already aboard.Payment Rails' clients include Upfluence, with offices in New York, France and Switzerland, which specializes in influencer and content marketing on behalf of brands including Nestle, Ricola and Air France.
Payment Rails has received seed funding of $1.1 million from investors that included former PayPal president Scott Thompson. In January Payment Rails will enhance its services by adding support for the tax documents freelancers require mostly in the U.S., Nixon said.
"For companies hiring freelancers, setting up the required W-9 tax forms is a major pain point, and we’re going to integrate that function into our services to eliminate complexity for customers," he said.
Also on the roadmap are plans to add debit push payments sometime next year, Nixon said. "Ideally we want to give companies the most direct way to pay workers, keeping it efficient and under their control," he said.