Why Your Contingent Workforce Payments Strategy is Costing You and How to Fix It

By Steven Huynh, Vice President, Payments Network and Strategy, Papaya Global

The contingent workforce, comprised of independent contractors, freelancers, and gig workers, is no longer an occasional resource. It has become a strategic asset. In the U.S., contingent workers represent between 30-40 % of the labor market today, a share projected to reach 50% by 2050. 

Paying these workers shouldn’t be a pain. But it is. Contingent workers pose a dual challenge for finance teams: cost control and payment efficiency. Traditional accounts-payable systems are poorly suited to unpredictable schedules, multi-jurisdiction compliance, currency conversion, and paying unbanked or mobile workers. The result: costly delays, FX leakage, and compliance risks.

Enter fintechs, which are disrupting legacy payments methods and alleviating this contingent workforce payments pain with innovations like digital wallets, real-time cross-border disbursements, virtual bank accounts, and increasing crypto options. 

Looking at the technology available today, it is clear that modern financial tools can significantly reduce costs and increase control. A key innovation is the use of multi-rail architecture, which enables organizations to use global wallets for local currency disbursements. These wallets can be balanced with real-time payment rails such as Faster Payments, RTP, and UPI, and even include crypto rails where appropriate. According to research by the World Bank, fast payment systems (FPS) not only allow real-time pay but also support new payout models that are crucial for global logistics and contingent workforce payments.

Foreign exchange (FX) optimization and risk reduction are also major benefits of digital wallets. These wallets can lock in FX rates at the time of payout, hedge against currency fluctuations, and ensure that payees receive funds in their desired currencies, an especially critical feature in unstable emerging markets. 

From the payee’s perspective, fintech solutions enhance speed, flexibility, and financial inclusion. Faster access to wages has been shown to increase employee satisfaction while reducing dependence on credit services. Moreover, digital wallets support unbanked individuals, enabling payouts even where recipients lack traditional bank accounts. This reflects the success of mobile money in lower-income countries, where digital payment systems have reduced payout costs by 20–66%. Additionally, the ability to hold and convert multiple currencies enables recipients to manage their money more flexibly, protect against risk, or make digital conversions when needed.

On the compliance and automation front, fintech platforms are embedding critical tools like Know Your Customer (KYC) automation, tax form issuance, and local remittance licenses. 

Smart routing and cost management capabilities further enhance the value of real-time payment providers. Companies employing smart routing technologies to dynamically select the most cost-effective payment corridors, thus minimizing transaction fees.

These innovations translate into tangible business impacts, especially for finance teams. Digital disbursements can reduce cross-border costs compared to traditional bank wires. Locking in FX rates and bypassing multi-bank markups via wallet accounts results in significant savings. Instant payment availability boosts employee satisfaction and retention. Built-in compliance tools reduce errors and regulatory exposure, while automation lowers the manual workload, reduces the volume of accounting adjustments, and minimizes disputes.

However, there are still challenges to address. Many fintech payments networks remain fragmented and localized. This can be mitigated by partnering with providers that offer broad global coverage, like legacy banks. Regulatory complexity is another concern, especially as real-time and digital currency rails continue to evolve. Choosing providers that offer built-in regulatory compliance in target jurisdictions can save finance teams from navigating unfamiliar legal terrain. 

Lastly, some finance teams may be hesitant to move away from traditional banks. Demonstrating a clear return on investment, in both costs and efficiency, can help overcome this resistance, especially when benchmarked against competitors and tied to improved worker satisfaction.

The performance of these innovations is tied directly to proper implementation, and finance teams are advised follow a best practices roadmap. First, audit current payment process flows to identify payees, currencies, and payment delays. 

Next, segment payee groups (freelancers, contractors, and gig workers, for example) and select a fintech stack that includes a core wallet provider with multi-currency support, integration with real-time payment rails, and FX control. Start with a pilot program targeting the highest-volume corridors or most problematic payees. Gather data on cost per payout, timing, and compliance exceptions. Layer in analytics dashboards to monitor routing performance, FX spreads, and fee variance. Finally, refine and expand by regionalizing your fintech stack, like adding UPI for India, mobile wallets for Africa, or e-money rails for Europe as needed.

With 40% of the global workforce requiring agile, compliant, and international payment solutions, fintech tools are no longer optional. The ability to hire globally and pay locally is a competitive edge, now more than ever. Enterprises seeking to grow and scale their contingent workforce can’t afford to fall behind, both literally and figuratively. 

Fintech tools are essential for finance teams looking to optimize costs, ensure compliance, and improve worker satisfaction. The smart use of digital wallets, real-time payment rails, FX hedging, and embedded compliance reduces costs, accelerates payouts, and enhances financial inclusion. 

For finance leaders, the message is clear: adopt fintech-powered payments, start with a pilot, measure results, and scale strategically, or risk falling behind with slower, costlier, and less effective solutions.