Patrick T. Fallon | Bloomberg | Getty Images
Ride-healing giant Uber makes a deeper dive into financial services.
The company announced on Monday the formation of a new division called Uber Money to house its efforts, which includes a digital wallet and upgraded debit and credit cards. The main focus will initially be expanding Uber's efforts to give its 4 million-plus drivers and couriers worldwide access to a mobile bank account so they can get paid after each trip, according to Peter Hazlehurst, who will lead the new division.
"We wanted to help everyone understand that there is a new part of Uber focused on financial services and that has a mission to give people access to the type of financial services they were excluded from," Hazlehurst said in a telephone interview.
Under pressure to make a profit amid competition from new divisive participants around the world, Uber is betting that by expanding the economic ecosystem, it can keep drivers and riders loyal to its platform. The company topped 1
In June, CNBC first reported that Uber planned the creation of financial products by hiring engineers for a fintech outpost in New York.
Uber launches a debit card globally with an enhanced "instant payment" service it has tested in the US and a few other markets. The feature has accelerated in the United States, with more than 70% of driver payments made with immediate payment, according to Hazlehurst. It's actually a bank account with no charge, with the debit card in the United States linked to an account provided by Green Dot.
"Not only do you have access to your real-time earnings, it costs you nothing to keep your money there, and you can spend them whenever you want," Hazlehurst said.
These payment innovations highlight the reality that many in the job are struggling to make ends meet. Another popular feature, with no cost cost of $ 100, helps drivers with cash to pay for gasoline to start a business day. However, it is a better option than high-interest loans on payday.
Uber's ambitions could drive drivers into the realm of digital finance in parts of the world where cash is still king, such as Pakistan and Bangladesh. About 40% of all Uber trips globally are paid in paper currency, Hazlehurst said, and Uber is eager to bring that figure down.
After equipping drivers with electronic bank accounts – which reciprocated the model of so-called challenger banks like Chime and Varo – would Uber one day appear to give its many million riders an account?
"I think so," Hazlehurst said. "The reality is that the needs of our partners in the United States and in Brazil and in Australia and in India in many ways reflect the needs of consumers as well, especially in the cash-heavy economies. And the opportunity we have is to expand to help all these people with access to financial services. "
An advantage that Uber has over other new players in the bank is its huge scope, which allows the company to negotiate better deals with suppliers, he said. "We do not need to adopt the traditional fee-income model to operate these services," Hazlehurst said.
Uber's move is the latest sign that tech giants are looking to get into finance. Apple recently launched a credit card with Goldman Sachs, and Amazon has been offering small business loans to its merchants for several years. Facebook unveiled an ambitious plan this year to help recreate global finance with the libra cryptocurrency, though that effort lost momentum after some business partners left the project.
Among new products, Uber would unveil at a Las Vegas payment conference. digital wallet called Uber Wallet that riders and drivers can use to save dollars, track transaction history and make electronic payments. Apple Pay and Google Pay will be integrated with the service early next year so drivers can immediately use their earnings, even without a physical debit card, Hazlehurst said.
Uber recently surveyed US drivers if they would be interested in taking small loans from the company, said Hazlehurst, who confirms a Recode report. It is too early to say whether they will do so in the United States, but in several countries, including Brazil, India and Peru, Uber already offers micro loans to drivers, he said.
For riders, Uber's credit card, a common product with Barclays, will be reintroduced with richer rewards for payments within Uber's transportation and food delivery services.
In its short time as a public company, Uber shares have been struck by skepticism about the outlook and a broader shift in investor sentiment that favors profits over growth. The company's stock trades more than 25% below the stock price on May 45. Uber reports third quarter results on November 4th.