More than a gig: Uber's new card targets professional drivers

Despite its reputation as a ride-sharing app, Uber has long been at the forefront of digital payments.

In addition to the frictionless payment system that's key to the success of its core business, Uber was an early adopter of faster payroll and earned wage access; its first consumer credit card also allowed users to apply for and manage the account within Uber's app rather than the issuer's mobile banking app — a model that foreshadowed Apple's approach to its own credit card years later.

Uber's latest financial product, announced Thursday, is meant to appeal to users who operate as small businesses rather than gig workers. The Uber Pro Card, a debit card developed in partnership with Mastercard, Marqeta and Branch covers payments and incentive marketing for gas, fees and other expenses that drivers and couriers incur.

Uber already offers a debit card with gas-related rewards, and the new Uber Pro account is bundled with money management features and hefty rewards —  cash back of 10% on gas and 12% on electric vehicle charging — designed to appeal to power users. A backup balance feature offers access to $150 to cover very short-term expenses, such as charging or gas. Users can track earnings, transfer funds to other bank accounts and manage savings though an app. There's no annual fee.

Uber Pro enables the ride-sharing company to diversify its product line, potentially competing with payment companies like Square, Stripe and PayPal, as well as legacy merchant acquirers in the battle to gain share among small businesses.

Digital payments

Apple Card fortifies the digital model, and that's trouble for banks

August 9, 2019 12:01 AM

"We are layering on capabilities that are beyond purchase transactions," said Adam Granoff, senior vice president of digital partnerships at Mastercard, adding Uber is also a user of Mastercard Send, a digital payment platform that supports faster payroll access for drivers. "Having immediate access to earnings is tremendously important for this segment."

Like Visa, Mastercard has been pursuing sources of revenue beyond interchange, and the Uber collaboration gives the card network a route to extend real-time cash-back rewards, along with other business services and worker benefits that are integrated into its platform, said Richard Crone, a payments consultant.  "The Uber Pro Card can be used for more than Uber drivers," said Crone. "It's an example of embedded banking integrated into a business application used by micro merchants, sole proprietors and small to medium-sized businesses."

There's an additional link to a rebate program for small businesses, Mastercard's Receipt Management feature, security and emergency services and other record-keeping tools. Stride's contribution to the collaboration is a portable benefits program for contractors with access to health, dental and vision plans.

"I would not be surprised to see earned wage access added at some point," said Steve Murphy, an analyst at Mercator. "It's an open-loop card so it's not restricted. They can buy wherever Mastercard is accepted."

Uber is positioning the card for drivers and couriers, which would suggest a user base of gig workers who deliver products on behalf of third parties via Uber's app. Uber Connect, for example, offers small merchants same-day delivery for items like clothes, consumer goods or non-restaurant food, such as baked goods. Uber for Business offers rides, package and food delivery.

These services target a different demographic than traditional fleet card providers, such as Wex, which mostly serve long haul shipping. That potentially creates a distinct niche for Uber that is in some ways similar to the early days of Square, when it offered card acceptance hardware to small merchants that were mostly outside of the market for traditional financial institutions. 

Uber, which allows users to store payment credentials for repeat uses, offers a payment experience that has influenced other firms  that seek to make the payment "invisible" and a gateway to cross-selling. Uber, and other ride sharing apps such as Lyft and Grab, have also taken advantage of their user base and smooth payment processing in this manner.

As part of its payments and financial services strategy, Uber works with Marqeta, which powers cloud-based card issuance. In 2020 Uber added Marqeta's card-issuing technology to offer cards to Uber Eats drivers. The driver swipes their card when ordering, and the card is funded if the order is approved. And Marqeta in late 2021 partnered with Branch to allow Uber Freight to bring payments and financial services to logistics and transportation clients.

The new project is a continued expansion of the company's payment partnership into Uber's core business of rideshare, said Wylie Leabo, strategic accounts director for Marqeta, in an email, adding many gig-economy workers are underserved by traditional banks and the new product is designed to provide access to faster money movement. 

"If drivers' spend and banking shifts to the Uber, Branch and Marqeta platform, so do the attendant economics," said Eric Grover, a principal at Intrepid Ventures.

Uber has more than 5 million drivers, according to BusinessofApps, which also reports it has 118 million active users. But Uber has had only one profitable year, in 2018, and in 2020 and 2021 lost a total of $7 billion, though only $400 million of that loss came in 2021. Uber has also faced political pressure, partly tied to the benefit and compensation structure it offers to drivers.

Uber is looking for new ways to offer drivers and couriers more support on the road, said Andrew Macdonald, senior vice president of mobility and business operations at Uber, in an email.

"This is certainly a way to deepen relationships with gig workers, earning them revenue and loyalty while fending off financial institutions," said Daniel Keyes, an analyst at Javelin Strategy and Research.