Smartphones Unlock Banking for Gig Workers and Underbanked

In emerging economies, the "portfolio income" model has evolved from a short-term survival strategy into a structural feature of the labor market, with online gig work now accounting for up to 12.5% of the global workforce. This shift exposes a significant gap in traditional financial infrastructure: millions of workers remain underbanked. According to PayJoy, 45% of its customers lack a basic bank account, debit card, or credit card.

The Smartphone as Capital Equipment

For  today’s gig worker, a smartphone is not a discretionary consumer purchase but essential capital equipment. It functions simultaneously as a workspace, marketplace, and payment terminal. Data from PayJoy’s 2025 Impact Report underscores the extent of this reliance:

• 86% of customers say their financed smartphone is the primary enabler of their current job or business.

• 91% depend on mobile connectivity to work outside the home, enabling the flexibility required to manage multiple income streams.

• 52% report a direct increase in income after gaining access to a functional smartphone.

Traditional lending models often exclude gig workers due to irregular cash flows and “thin” credit histories. Device-secured credit is beginning to address this gap by reframing risk. Rather than functioning as a one-time loan, this type of financing serves as a financial buffer that helps smooth income volatility.

Research from UC Berkeley suggests that access to this form of credit is equivalent to a 6% increase in household income on average. For families operating on narrow margins, where monthly expenses often exceed reported income, this incremental gain can be meaningful. As a result, 87% of users report feeling more financially secure after accessing these products.

Building the "Graduation Effect"

The long-term opportunity for fintechs and retailers lies in what PayJoy describes as the “graduation effect.” By using a smartphone as both a productivity tool and collateral, workers generate a digital repayment history.

Each on-time payment increases the likelihood that previously excluded individuals can qualify for more advanced financial products. Studies show that access to credit can reduce the risk of extreme poverty by 25% and double household spending on education. In markets such as Mexico—where only 42% of adults can cover monthly expenses with income alone—flexible, device-backed credit creates a viable pathway to higher-value purchases.

As the gig economy continues to expand, the “hidden infrastructure” of connectivity and inclusive credit will increasingly determine competitive advantage in emerging markets. By shifting away from predatory debt structures and toward transparent, fixed-cost financing—such as products with no late fees and no compounding interest—providers can convert financial fragility into a scalable and sustainable business opportunity, according to PayJoy.