Uber goes to financial services: how and why?

In late October, we all saw Uber is creating a new division — Uber Money. Yes, such big companies don’t bother themselves with the name. The goal of Uber Money is to structure and expand its segment of financial services. As part of this line of business, Uber plans a lot: from credit and debit cards to a digital wallet and products for mutual settlements with drivers. I decided to collect everything that is known about Uber Money, how it is planned for implementation in one article. And to answer the question why global startups are going into a transactional business — once again.

Most of the information about the project became known at the Money 20/20 conference — where the Uber Money announcement took place.

Key options

Real-time earnings. I don’t know the details of Uber’s work in Ukraine, but in the USA, drivers and couriers work on a weekly basis of completed orders. Uber Money will provide instant access to accounts after each trip or delivery.

Debit card and cashback. A free debit card will be added to the Uber Driver app — apparently in order to realize instant earnings. And, of course, not without cashback. It will be given for expenses on gasoline — from 3% to 6%, depending on the class of cars.

Mobile wallet. It is planned to incorporate the functionality of the Uber Wallet application into the main Uber Driver app. The goal is obvious — financial management, money transfers between accounts and payouts to other cards.

Credit card (and cashback again). Uber is reanimating its credit card project: with a cashback of 5% for expenses. If a debit card is made solely for payments, then the credit line will allow Uber to easily enter the sphere of microcrediting individuals and not lose money on dishonest drivers.

What’s all this for?

There are several reasons. Uber is no longer a small startup, but a global company. Investors continue to pour money there, but not so willingly. Both new and existing investors want to see new monetization models of the product and more effective Uber ways to it’s profitability.

One of such methods can be money transfers (including international ones). Uber Money CEO Michael Hazlehurst said Uber drivers send up to 25% of their income to other cards, both domestically and international. Thanks to the international presence of Uber (which means global treasury operations), Uber will earn on commissions for transfers to other cards.

The second, of course, is credit activities. In an interview with Forbes, Hazlehurst said loan services isn’t on the company’s roadmap, but admitted that they are testing microloans. Obviously, full credit line is a matter of time.

Thirdly, analytics. Initially, Uber Money data on drivers’ incomes and money transfers will obviously be used to make decisions on credit activities and subsequent earnings on a credit line. Later, big data analytics can be additionally monetized via cooperation with banks and other big brands.

Uber Money will have benefits from both sides: they create a convenient ecosystem for their drivers, who will work with them more often than with competitors due to more favorable and transparent conditions. When the eco-system is built and loyalty is settled, Uber will have commission income from each financial transaction, about 75% of which won’t be associated with a taxi.

CEO of the international payment system LEO, the shareholder of IBOX Bank

Love podcasts or audiobooks? Learn on the go with our new app.