Facebook’s libra could solve the gig economy’s payment problem
Ordering your evening meal or weekly groceries online has never been easier.
In most cities, you can now book a car from your phone to get you from A to B in minutes.
All of this is made possible by two things: the marketplace technology that facilitates instant transactions, and the gig economy that delivers the end product or service.
It’s predicted that over 1.1m people are involved in the gig economy in the UK alone. This has arguably been one of the biggest workplace trends of the century, and its popularity has been driven by those who are looking for flexibility and freedom.
And it’s not just a western phenomenon – in developing countries it has helped the unemployed onto the job ladder and driven economic growth.
Despite these positives, one critical issue lingers: payment. If it’s possible to make instant transactions on digital marketplaces, why is it so difficult to pay workers in the gig economy?
One of the biggest barriers to being paid is not having a bank account to receive payment. Of 5.7bn adults on the planet, it’s estimated that 1.7bn are unbanked.
In the western world, this may be hard to imagine, but in many countries obtaining the required documentation and navigating outdated bureaucratic processes make opening an account impossible. This is particularly true in economies like China and India, where the unbanked are actually the majority.
On top of this, 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 is needed and should be welcomed, as traditional banking methods are leaving workers worse off.
Last month, Facebook announced a possible solution in the form of libra, a global digital currency powered by technology similar to bitcoin.
With two billion users, the social media giant has the potential to create one of the largest financial platforms in the world and connect billions of people.
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, libra could eliminate issues like bank account accessibility and inflexibility in payment currencies.
Of course, while this sounds easy, there are still barriers to overcome. It’s a seismic moment for global finance, and it’s yet to be seen how regulators and governments will react and try to regulate the technology. It’s likely that some countries will endeavour to ensure that libra never sees the light of day – we’ve already seen President Donald Trump come out against it.
But despite these obstacles, 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 for gig workers in particular.
While the impact of Facebook’s libra project is yet to be seen, I’m hopeful that it will accelerate the conversations and questions about regulation and banking that have yet to be answered on cryptocurrency.
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.
That’s certainly food for thought the next time you order dinner online.
Main image credit: Getty