Uber Money sets up in a deeper push to capture the gig economy worker segment
With over 4 million drivers and 100 million active users, Uber is one of the most scaled businesses across the globe. However, profits are hampered due to price wars. So what does a company facing an ever increasing pressure from investors to become profitable do?
Uber has lately been in the news for its diversification strategy to provide more services for its gig economy workers, thereby deepening its share in the segment that is larger than its end customer base.
The highlights have been the launch of Uber Works, that connects workers to gig in the city; and now with Uber Money that is rolling out multiple benefits to its workers.
Uber Money has introduced its:
Digital wallet, that allows workers to keep track of their earnings and spendings;
Uber debit account and debit card in partnership with Green Dot, that enables “instant pay” for services rendered, a $100 overdraft facility without any interest, as well as “cash back on gas starting at 3% and up to 6% for the highest tier of Uber Pro drivers,” wrote Peter Hazlehurst, Head of Uber Money.
Finally, it has also launched a credit card in partnership with Barclays for individual customers, who can earn cashback of 5% when “spending across the Uber platform, including Uber Rides, Uber Eats, and JUMP bikes and scooters.”
“We wanted to help everybody understand that there’s a new part of Uber that’s focused on financial services and that has a mission of giving people access to the type of financial services they were excluded from,”Peter Hazlehurst, Head of Uber Money said to CNBC
Many countries in the world have a large cash-strapped worker segment. In developing countries, this segment faces another challenge of not having access to digital banking services. Day-to-day wages have since long been their way of survival.
Uber and its likes have pushed the segment into the digital world and have arguably also increased job opportunities by connecting drivers to customers. However, the end-of-month payment model has introduced its own set of challenges for drivers.
With real-time payments, overdraft facilities and other features being rolled out, the low-income gig economy workers can see more transparency in the earnings as well as live and earn more comfortable.
The venture into Uber Money could play a huge role in drivers becoming loyal to the platform. And naturally, the platform with the most drivers will win. This strategy is also a smart way to step away from the price wars that have caused havoc on profitability, and step up the game with unique propositions.
Moreover, facilitating digital payments for its drivers and customers will help Uber move transactions further online and increase transparency. Currently, approximately 40% of Uber’s global trips are made using cash.
Uber has become the latest global tech giant to venture into the financial sector. It’s biggest strength today to win in this gig economy worker segment, is its sheer scale and the large market size.
It has also hinted that it could venture into providing a bank account. Will we see tech giants becoming the banks of the future? They have disrupted the traditional industries and finance is the latest in line. While banks still have the trust and regulation factors going strong for them, without innovation and introduction of unique propositions soon, they will find it challenging to compete with the likes of Uber, Apple, and perhaps even Facebook depending upon how its Libra project takes off.