Why fintech is the fuel powering Australia’s gig economy
By Selda Kaplan (pictured), Co-Founder & CEO at TaxLeopard.
The gig economy has quickly become a critical segment of the Australian workforce. Whether you’d like groceries delivered to your door in less than 20 minutes; a ride to the airport for a fraction of the price of a taxi; a new company logo; or a fresh website at the click of a button – the chances are that the service was performed by a worker of the gig economy.
Powered by digital apps and online platforms, the sector is only growing in popularity. According to an Actuaries Institute report, the Australian gig economy grew 9-fold between 2015 and 2019. In 2019, it grew a further 33% to an estimated 250,000 workers with 6.3 billion in consumer spending. Those figures though, are all pre-pandemic. The pandemic––which led to a focus on home deliveries and flexible working arrangements––appears to have only increased demand for the gig economy globally.
Working in the Australian gig economy sector may become more attractive too, with the recent bill by the Labour government committing a $400m wage boost for gig economy workers.
Fintechs are helping the sector thrive
Vital to the sector’s success, is the superior level of experience it can provide compared to more legacy services. A critical component of that is the modern financial tools that gig economy providers can adopt to further streamline their offerings.
Take payment company Stripe’s global partnership with Uber, for example. The partnership helps to reduce costs and gives customers more flexible ways to pay for Uber Rides and Uber Eats. Furthermore, it allows customers to securely and instantly add bank accounts without leaving the Uber app, and saved bank details can then be easily reused by customers for future purchases with Uber.
Australian insurtech CoverGenius gives ridesharing providers tailored protection that meets the specific needs of their services. It means they can offer their drivers and riders protection where it’s needed — including for accidents that lead to loss of income or hospital bills. Its integrated solutions also mean that rideshare platforms can provide customers with a hassle-free experience when they want to make a claim and access instant payments in 90+ currencies.
Some fintechs are literally born to serve the gig economy. Take Nowsta, for example, which is redefining the labour management process by enabling gig economy companies to easily manage and maintain all temporary, flex, and gig workers under one platform. They can quickly submit staffing agency work orders, source on-demand talent, and oversee operations across scheduling, time and attendance, payroll, and invoicing.
Worker challenges
Despite the industry’s success, for gig workers things aren’t always plain sailing. Flexible working arrangements can be less secure than full-time employment and don’t come with the same level of benefits, such as access to sick or paid leave. And the added stress of managing tax obligations and invoices can also create friction for workers. Some may even forget to pay themselves superannuation, which could impact their retirement.
Currently, the ATO is chasing $40m from ride-share drivers who appear to be finding managing their own tax obligations challenging. The issue is, that help from a dedicated accountant could be financially out of reach for many in the sector. For a gig worker, raising an invoice, paying one’s own super, keeping a spreadsheet of payments, chasing payments, preparing a tax return, budgeting and paying off taxes at the end of the year can be challenging. Not to mention having to manage GST, and prepare and submit quarterly business activity statements and annual tax returns. Some gig workers may be avoiding aspects of their tax obligations because it can be intimidating.
Fintechs easing the burden
There are technologies available now that are not only reducing these headaches, but making managing finances incredibly easy for gig workers – providing a bookkeeper, accounting assistant, and tax agent all in one. These innovations are helping workers to distribute invoices, claim expenses, contribute to their superannuation, pay GST, and have their tax returns and business activity statements taken care of. Some are even AI-powered to speed up processes and streamline services.
At TaxLeopard, for example, we’re a one-stop accounting software and tax app run by CPA accountants that takes care of workers’ tax obligations. It’s AI-powered with a simple, easy-to-navigate interface. This gives workers the comfort of knowing that their taxes are taken care of in a frictionless way, meaning they can focus solely on their jobs and free up valuable time to take on more work or enjoy much-needed time off. We’ve developed important partnerships with several gig economy platforms such as DoorDash, DiDi, and Fiverr to help workers across Australia focus on the work they’d rather be doing––not their taxes.
A flourishing gig economy
With a strong focus on flexibility post-pandemic, all signs point to the gig economy continuing to thrive and grow into the next decade. To ensure that workers in the sector can do their work as seamlessly as possible, fintechs will act as a nurturing tool––powering workers to do their best work, all while offering consumers across Australia best-in-class customer experiences.
