Skip to content

Tech & Digitalisation

Revolutionising Gig Payments Using CBDCs

Paper10th March 2023

Chapter 1


The gig economy is growing fast, leading to changes in the nature of work across the world. According to the UK government, the “gig economy involves the exchange of labour for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers on a short-term and payment-by-task basis”. The bedrock of the gig economy is gig work, which is best described as any form of occupation outside the traditional employer-employee relationship and includes freelance, contract and part-time arrangements. Nearly 78 million people globally are expected to be employed in some form of gig work by 2023. The increasing popularity of gig work is attributable to its flexible, remote-first and on-demand nature, which is more attractive to vulnerable and excluded populations such as young people and women.

The concept of gig work is not new. However, the rise of digital applications and online platforms has considerably increased its popularity and feasibility. Applications and platforms, such as Fiverr, Upwork and Uber, enable real-time and on-demand matching of demand and supply, improving the experience for both the provider and the gig worker.

The gig economy is expected to double in size between 2018 ($142 billion) and 2030 ($311 billion). This robust rate of growth is only likely to increase as platform adoption becomes common in emerging economies. Indeed, the number of gig workers in Africa alone is expected to increase from 5 million in 2019 to 80 million in 2030. Similarly, India is expected to add 23.5 million gig workers in the coming decade.

Even though gig work represents an increasingly popular form of employment, policymakers and scholars are concerned about the terms of employment, working conditions and financial security that gig workers experience. In most nations, gig workers are classified as independent contractors, which means that they do not enjoy employment-related benefits such as pensions, gratuity and health insurance. Moreover, gig work such as on-demand cab and food-delivery services has occupational hazards related to the nature of work that are not accounted for or regulated as they would be in more traditional employment contexts.

Another key concern with gig employment is the financial security of workers who have no buffer and thus rely heavily on timely earnings to survive. About 51 per cent of surveyed workers in the United States stated that their earnings from gig work were essential for daily needs, while another 35 per cent stated that gig earnings were important though not essential for their survival. Given gig workers’ heavy reliance on timely earnings, it is critical that payment is transferred to them without delay. However, this is seldom the case and payments are often delayed, further increasing the financial insecurity of gig workers.

This report undertakes an examination of the payments component of the gig economy and recommends technological interventions that make real-time payments more feasible and convenient. If adopted by policymakers and gig platforms, they can help address at least one of the critical payment-related challenges faced by gig workers. It is understood that making gig work fair, safe and decent requires a complex and multi-pronged approach including internationally aligned regulation, enforcement and changes in socio-cultural norms. The recommendations of this report are thus pragmatically limited in scope and designed to be considered within the broader contextual approach of enhancing the lives of gig workers.

The report proposes that a Central Bank Digital Currency (CBDC) is a potentially optimal mechanism for implementing real-time gig payments. It concludes by providing suggestions for policymakers and regulators on designing CBDCs to facilitate real-time payments.

Chapter 2

The Current Gig-Payments Landscape

There are two primary issues related to gig payments:

First, gig workers are usually paid relatively low wages, which inevitably impacts their financial security and socioeconomic inclusion.

Recent studies by the Fairwork Project, run by the Oxford Institute and Berlin Social Science Centre, found that gig work platforms do not pay their workers a fair or living wage in many countries. For instance, its Cloudwork Ratings 2022, which studied 15 online digital labour platforms, found that no platform was able to provide evidence that workers were paid local minimum wages.

The second major problem with gig payments is that they are often delayed as employers continue to use traditional payment mechanisms (such as cheques and cash) and fixed timelines to process those payments – typically monthly/bimonthly.

Moreover, given that workers expend money as part of their gig assignments, they are essentially temporarily subsidising their employer as they wait to be compensated, for example, for fuel and vehicle maintenance. As a result, gig workers are typically forced to dip into their savings or rely on credit to meet their job expenses. Nearly 57 per cent of gig workers surveyed as part of a study in India in 2021 stated that they had to take on short-term debt to tide them over, while 84 per cent had to use their savings.

Bolstering financial security for workers requires, among other things, a sustained increase in wages along with an improvement in the payment mechanisms used to transfer earnings. However, average wages globally have seen a gradual post-pandemic decline. It is unlikely that wages will increase significantly in the short term as several economies are already in or are heading towards an economic recession. However, addressing how payment mechanisms can be improved technologically for the financial security of gig workers can be done now to help mitigate the growing risks at this time.

Chapter 3

Real-Time Payments Deliver Benefits for Gig Workers and Employers

The term "real-time payments" refers to a new paradigm of payments that are transferred almost immediately. Unlike traditional payment mechanisms, real-time payments show in the beneficiary’s account almost immediately and can benefit gig workers and gig platforms in the following ways:

Gig Workers

Real-time payments to gig workers enable access to wages as soon as workers deliver. This reduces the need for cash-strapped workers to use their savings or take short-term credit to meet work-related expenditure. Receiving payments in real time also increases the certainty around payment schedules, allowing workers to adopt more sophisticated investment and savings strategies. It is, therefore, no surprise that most gig workers display a strong preference for real-time payments. A Visa survey of gig workers in Canada shows that 89 per cent prefer real-time payments.


To retain and attract the best talent, the incentives to adopt real-time payments are clear for gig-platform companies. Indeed, workers cited receiving money in a timely and predictable manner as being key to workplace happiness and loyalty. Another recent report on the future of payment highlighted unpredictable payments as one of the most common reasons independent workers switch employers.

Chapter 4

How Are Real-Time Payments Currently Implemented?

The technology and mechanisms to enable real-time payments already exist. Both traditional payment channels and novel cryptocurrencies provide mechanisms through which payments can be sent in real time.

Traditional Payment Rails

Leading financial-services companies, such as Mastercard, Visa and PayPal, provide mechanisms for gig workers to receive real-time payments. For example, Stripe, Visa and DoorDash have partnered in the US to allow workers to withdraw their earnings to their debit cards or bank accounts daily.


Cryptocurrencies enable an enhanced version of real-time payments known as streaming payments. As the name suggests, streaming payments involve a continuous “stream” or flow of payments from one account to the other. Unlike most current payment methods, streaming payments can be programmed to flow from one account to another at intervals of as little as one second. Streaming payments utilise smart contracts, an innovative application of blockchain technology. In simple terms, a smart contract refers to a self-executing code encrypted and stored on the blockchain. They are self-executing because they are programmed to act when certain preset conditions are met. As a result, smart contracts allow for complex payment logic to be applied to payment functions. Decentralised apps (dApps) – interactive applications hosted on the blockchain – already allow users to set up streaming payments to recipients who have crypto-wallets to receive funds. Some leading examples are StreamFlow on the Solana blockchain and Sablier on Ethereum.

Chapter 5

Challenges in Implementing Real-Time Payments at Scale

While the technology for paying gig workers in real-time already exists, its adoption for this purpose has been somewhat limited. Both traditional payment mechanisms and novel cryptocurrencies suffer from a few drawbacks that make them unsuitable for making real-time payments at scale. These drawbacks are captured in the figure below:

Figure 1

Obstacles that hinder real-time payments on existing payment channels

Source: Author

Given the obstacles that existing payment mechanisms face in operating real-time payments, exploring other alternatives is a worthwhile pursuit for policymakers. CBDCs, which are a novel mechanism to distribute fiat currency digitally, present a compelling alternative worth exploring.

Chapter 6

What Are CBDCs?

CBDCs are digital forms of government-backed currency that are issued by the central bank of a country. Unlike other forms of digital payments, such as digital wallets and cryptocurrencies, CBDCs represent a direct claim on the central bank and are digital forms of fiat currency. 

CBDCs are different to other digital-payment mechanisms, as the Peterson Institute for International Economics has demonstrated.

Broadly, there are two types of CBDC: wholesale and retail.

Wholesale CBDCs are issued to and used by regulated financial institutions in a nation. Wholesale CBDCs are designed for larger interbank settlements that are usually required to maintain reserves or transfer remittances. In essence, wholesale CBDCs serve the same purpose as central-bank reserves with some additional functionality, such as conditional payments.

Retail CBDCs are issued by the central bank for direct use by households and private enterprises and can be considered digital equivalents of cash. Central banks can adopt different distribution models, namely direct and indirect, for retail CBDCs. In the single-tier or direct model, the central bank is responsible for the issuance, distribution and management of the CBDC without the involvement of financial intermediaries. As the name suggests, this method involves a direct interface between the central bank and citizens. Conversely, the two-tier model relies on the participation of financial intermediaries for the distribution of the CBDC to end-consumers.

Chapter 7

Why Are CBDCs a Potentially Optimal Solution for Gig Payments?

Research suggests that CBDCs can usher in more efficient, secure and accessible payments, particularly against the backdrop of declining cash transactions and increased retail use of other forms of digital payments. This is particularly true of retail CBDCs which can resolve some of the obstacles current payment channels face in operationalising real-time payments. Indeed, retail CBDCs may be ideally suited for real-time payments due to the following characteristics:


CBDCs can reduce friction in existing payment systems by lowering transaction costs and improving speeds. Indeed, the prospective role that CBDCs can play in implementing instantaneous payments has been a major point of interest for central banks. As noted previously, transferring earnings to gig workers in real time at low cost would benefit their overall financial security and reduce dependence on credit.

Trust and Liquidity

CBDCs are issued by the central bank and are backed by its reserves. Consequently, they are likely to engender greater trust and acceptance among private enterprises and citizens, including platforms and gig workers, compared with other payment mechanisms, especially cryptocurrencies. Moreover, CBDCs will derive their value from the underlying currency. They will therefore be more stable and liquid than alternative digital-payment mechanisms such as cryptocurrencies. A deep liquidity pool is vital to support the large volume of gig payments.


CBDCs can provide a gateway for unbanked and underbanked sections of the population to access digital financial products. Digital CBDC pilots, such as Ghana’s e-Cedi, are already experimenting with offline availability and settlement of CBDCs using tokens. Making digital currency more accessible will increase the pool of individuals who can participate in the gig economy by including those without consistent access to the internet, a smartphone, a bank account or a debit or credit card.

Cross-Border Transactions

CBDCs can also make cross-border payments faster and more seamless, allowing gig workers to explore employment opportunities with platforms in other nations. Several institutions, including the Financial Stability Board (FSB), are exploring the potential for CBDCs to serve as means for cross-border payments. CBDCs could be made interoperable with each other, providing seamless, quick and cost-efficient international transfers globally. This would mark a sea change from the current international payments landscape, which is characterised by high fees and fragmentation.


The past three years have seen significant innovation in the financial landscape. The increasing use of blockchain and cryptocurrencies has yielded novel mechanisms of transferring money and ordering finances, such as streaming payments described above. CBDCs can be designed to allow for similar innovation in the financial realm, creating strong incentives for existing financial institutions and citizens to participate in CBDC adoption.


As CBDCs are issued and backed by the central bank, they present a potentially more secure alternative to the existing payments options. A key decision for policymakers from a security point of view is whether to choose a distributed ledger system or centralised database to record CBDC transactions. A centralised architecture offers greater control for the central bank and is likely to be more efficient. However, since the ledger of transactions is secured and validated by a single centralised entity, it also represents a single point of failure that could be exploited by malicious actors. Conversely, a distributed ledger, which is stored and validated by selected trusted parties, is likely to be more secure and transparent in its operation. However, there are concerns regarding the scalability of blockchain-based CBDCs.

Figure 2

A comparison of key features of payments mechanisms for gig payments

Source: Author

These characteristics of a CBDC have sparked interest in their deployment by nations worldwide. According to a Bank of International Settlements (BIS) study, nearly 80 per cent of central banks globally are studying CBDCs and considering their introduction in one form or another. Central banks in China, the Bahamas and Nigeria, among others, have already issued fully fledged or pilot versions of CBDCs. Despite the hype around CBDCs, they are still nascent in their application and deployment. Policymakers globally need to decide on their utility of as well as the technical mechanisms and architecture that should underpin such CBDCs. Hence, it is an opportune moment to provide suggestions on the fundamental design principles that should guide policymakers when crafting CBDCs for their respective purposes. The following section outlines some high-level principles that should inform CBDC design, focusing on enabling the rapidly growing need for timely gig-worker payments.

Chapter 8

Recommendations for Policymakers on CBDC Design and Architecture for Gig Payments

It is evident from the previous section that CBDCs provide a potentially cost-effective, accessible and liquid mechanism for real-time payments. However, realising this potential will hinge on how policymakers design CBDCs. While creating a CBDC is eventually a sovereign decision to be made by the government and central bank of a nation, keeping in mind its particular context, some broad principles can be applied across jurisdictions. The following paragraphs identify such principles based on a study of CBDC white papers, concept notes and research from international organisations such as the BIS and the FSB:

Factor in Gig Payments When Designing CBDCs

Policymakers must take a broader view of CBDCs and study the potential benefits they could have for the gig economy. As noted earlier, CBDCs can make gig payments faster and more reliable.

Keep End Users in Mind

A failure to provide any value addition for users over existing payment mechanisms would see CBDC adoption remain minimal, negatively impacting its potential for gig payments. For example, the adoption of Nigeria’s CBDC remains below 1 per cent even though it was launched more than a year ago. Indeed, most citizens stated a preference for existing payment mechanisms, including cryptocurrency, over the CBDC. The inability to differentiate between the features and value addition of the CBDC over existing payment mechanisms was a key reason for the low adoption. Accordingly, policymakers must strive to include features, such as real-time and streaming payments, that provide actual utility and benefits to end users. In this regard, they can consider conducting widespread pilot projects or setting up regulatory sandboxes to assess what features are preferred by end users.

Enable Cross-Border Interoperability

Policymakers must consider aligning their CBDC design efforts with other nations to facilitate interoperability, as suggested by the International Monetary Fund (IMF). Such interoperability would play a key role in the creation of a truly global gig workforce.

Security and Resilience

As a digital representation of a nation’s fiat currency, CBDC payment systems are likely to be the target of cyber-attacks and exploitation. Consequently, the security and resilience of the CBDC architecture must lie at the heart of its design.

Accommodate the Interests of Existing Financial Intermediaries

The successful implementation of a CBDC will hinge on creating incentives for existing financial intermediaries to facilitate its distribution and adoption. Policymakers must, therefore, ensure that their CBDC design adequately factors in the interests of existing intermediaries, including commercial banks, payment-service providers and fintech companies. The adoption of a two-tier model, where the CBDC is issued by the central bank but distributed and managed by financial intermediaries, is best suited to achieve this objective. The involvement of financial intermediaries will also enable the creation of new and innovative financial products for end users.

Balance the Need for Oversight Against User Privacy

A key factor in the widespread use and adoption of cash is the anonymity and privacy it provides. Cash transactions are not traceable to an individual and allow transactions to be settled without government surveillance. At the same time, the anonymity of cash leads to concerns over its use for illicit purposes, particularly money laundering and the financing of terrorism. When designing CBDCs, policymakers must strive to balance user privacy and anonymity with the need for oversight to counter illicit financing. Nations are considering different approaches to this problem. For example, in China, only transactions above a certain monetary threshold need to be reported to the government authorities. The UK is exploring technological measures that would limit personal data available to the central bank while still providing effective oversight for anti-money-laundering purposes.

Chapter 9


Gig workers face unique challenges, particularly when it comes to receiving timely payments for their work. This is where CBDCs come in. They have the potential to revolutionise the way we make and receive payments, including for gig work.

Well-designed CBDCs can make gig payments faster, more secure, accessible and cheaper. They can also streamline cross-border payments, boosting the prospects of workers gaining employment with global platforms. Now is an ideal time to discuss CBDC design principles, as many countries are actively considering the implementation of CBDCs.

Given the growing interest in CBDCs, it is important to establish clear design principles to guide their development and implementation. These principles should consider the needs and concerns of all stakeholders, including gig workers, central banks, governments and the private sector. By establishing these principles now, we can ensure that any future CBDCs are designed in a way that maximises their benefits and minimises their risks. Broadly, these principles must focus on accessibility, interoperability, security, innovation and privacy.

Overall, the use of CBDCs for real-time payments to gig workers has the potential to greatly improve the financial lives of millions of people around the world.

Lead Image: TBI


Practical Solutions
Radical Ideas
Practical Solutions
Radical Ideas
Practical Solutions
Radical Ideas
Practical Solutions
Radical Ideas
Radical Ideas
Practical Solutions
Radical Ideas
Practical Solutions
Radical Ideas
Practical Solutions
Radical Ideas
Practical Solutions