Millions of workers across emerging markets are increasingly dependent on the gig economy, yet they face a paradox: they are essential to the digital economy but remain excluded from the formal financial systems that support it.
A new impact report released by PayJoy, a public benefit corporation focused on ethical lending, highlights how smartphone-secured finance is plugging this gap for underserved populations.
The report, titled Gig Workers and the Hidden Infrastructure of Credit Access, outlines the financial fragility of the gig workforce and the role of alternative credit models in stabilising their incomes. With 59 per cent of PayJoy’s customer base now identified as gig workers, the data underscores a shift in how irregular earners are navigating financial volatility.
The Gig Reality: Long Hours and Income Volatility
The allure of the gig economy—flexibility—often comes at the cost of stability. According to the World Bank, online gig work now accounts for up to 12.5 per cent of the global labour force, a figure expected to rise. However, PayJoy’s data reveals a starker reality for these workers on the ground.
Despite working long hours—77 per cent of surveyed customers work more than seven hours a day, and 28 per cent clock over ten hours—many struggle to cover basic monthly expenses. For these individuals, who include delivery drivers, micro-entrepreneurs, and vendors, income is often patched together from multiple sources.
This “portfolio income” model leaves little room for error. A single unexpected expense or a dip in available work can spiral into a financial crisis, as traditional safety nets like savings or credit cards are largely inaccessible. The report notes that 45 per cent of PayJoy customers have no bank account, credit card, or debit card, leaving them entirely outside the formal banking system.
Smartphones as Economic Infrastructure
For gig workers, a smartphone is not a luxury item; it is their primary workspace, marketplace, and payment terminal. Losing access to a device often means an immediate halt to income.
The report quantifies this dependency: 86 per cent of customers stated that their financed phone enables them to work in their current job, while 91 per cent said it allows them to work outside the home. This mobility is critical for those balancing caregiving duties or multiple jobs. Furthermore, 52 per cent of respondents reported that access to the device directly increased their income.
Closing the Credit Gap
Traditional financial institutions typically view gig workers as high-risk due to their irregular income streams and lack of credit history. PayJoy’s model addresses this by using the smartphone itself as collateral. The technology allows users to purchase a device on instalment; if payments are missed, the device is locked, restricting functionality until the account is brought current.
While this mechanism effectively secures the loan, the report frames the impact in terms of welfare gains. Research conducted by UC Berkeley suggests that access to this form of pay-as-you-go financing provides a welfare benefit equivalent to a 6 per cent increase in income for the average customer.
This figure represents a “consumption smoothing” effect—essentially, the ability to access liquidity during tight periods prevents more severe economic shocks. Consequently, 87 per cent of customers reported feeling more financially secure after accessing credit through the platform.
Expanding Financial Inclusion
The report also details the demographics of those using this alternative infrastructure. Notably, 49 per cent of customers are women, and 33 per cent are entirely new to credit. For many, this initial loan serves as an entry point into the broader financial system.
By successfully repaying a device-secured loan, users generate a digital repayment trail. This data can potentially unlock access to further financial products, creating a “graduation effect” that moves users from device financing to broader financial inclusion.
Ethical Lending and Risk
The report emphasizes a commitment to “ethical lending” to distinguish the model from predatory alternatives. PayJoy asserts a “No Debt Trap” policy, which includes allowing customers to return the phone at any time to cancel their debt. Additionally, the pricing structure avoids compounding debt, with fixed costs established at the point of purchase and no late fees accrued over time.
As PayJoy expands—recently launching in Indonesia, its ninth market—the company’s growth reflects the immense demand for credit among the underbanked. With over 18 million customers served to date, the data suggests that for the gig economy’s workforce, the smartphone has become the single most critical piece of financial infrastructure they own.