The Potential Impact of Uber’s Own Payment Card in Boosting Bank Account Penetration in Africa

Uber, the globally recognized ride-hailing service, has innovatively tapped into the niche of digital payments to foster its exponential growth, offering seamless and affordable rides. Regardless of your location or the cash in your pocket, Uber lets users enjoy their ride, smoothly debiting the fare directly from their registered PayPal or bank card. But the question arises, what’s the next move when these payment options aren’t readily accessible?

The answer lies in Uber’s latest strategic move in Mexico, where the company has unveiled its own unique debit card. Collaborating with Bankaool, Mexico’s foremost digital bank, Uber now offers an operable solution for its users. With an initial top-up of MXN$200, $10 USD, or 4,600 Naira, users can expect to receive their UberCard within five to ten business days.

The UberCard, in partnership with MasterCard, offers universal usage, allowing cardholders to use the card beyond just Uber services. This card is not confined to the realm of ride payments, rather, it can be used for other transactions – a move that broadens its usability, attracting more users to its services. In a bid to promote the card’s usage, Uber is dangling a carrot to prospective users by providing a free ride to those who link this card to their accounts. This card is also commercially available in local stores.

With Mexico representing Uber’s largest market in Latin America, such a groundbreaking initiative is anticipated to aid in boosting app usage and expanding Uber’s footprint. This could set a precedent for other markets where digital payment infrastructure is not yet fully developed.

Focusing on Africa, particularly countries like Nigeria, Uber accepts cash payments in addition to several other payment methods. However, with Uber’s continual expansion and the growth of Africa’s banking population, it’s possible that Uber’s new payment initiative could roll out here too.

As it stands, only about 57 percent of the Nigerian population holds a bank account, with an even smaller percentage monopolizing nearly 90 percent of the total bank deposits. Strikingly, it is believed that a lowly 20 percent of Africans have access to bank accounts due to:

1) The physical accessibility of banks, mainly in rural areas.
2) A smaller workforce leading to less income and, hence, lesser people resorting to banking.
3) A deep-rooted mistrust in the banking system.
4) A paucity of adequate information about the banking process.
5) The lack of identification – a basic requirement for opening a bank account.

Given these obstacles, the introduction of an initiative similar to UberCard could act as a catalyst in bolstering the number of bank account holders in Africa. Uber, gradually gaining momentum in Africa, could potentially boost its market penetration through strategic alliances with local banks.

Setting sights on larger goals, the African market, teeming with scoped tech numbers like the estimated 350 million smartphone users by 2017, offers a rosy outlook. A prediction of over 50 percent of internet users in Africa conducting mobile transactions and a projected broadband penetration of 30 percent in countries like Nigeria by 2018, indicate a promising future for the digital economy, potentially fuelled by innovations such as Uber’s payment card.