Uber is launching a financial services unit called Uber Money
Uber, which has now hired about 250 new staff this year is expected to offer services like Uber Cash and debit cards. The big plan though is to open bank accounts for drivers.
Peter Hazlehurst, Uber’s head of payments told CNBC that “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.”
Uber like Facebook and other tech giants have been looking for alternative banking ways to bring the world’s unbanked or unbankable population online but the company benefits too. For example, Uber clocked 3.9 billion rides in the first half of 2019 alone with about the 10 billion milestone hit in 2018. Payment is automatically taken from a rider’s account and these fees are processed by third party applications which means this is a cost to Uber itself. Uber has reportedly lost $6.4b in such third party processing charges so far this year but Uber Money may be the perfect way to save money going forward and as Hazlehurst said in the CNBC interview, “We don’t have to take the traditional fee income model to operate these services.”
Uber though is silent on whether it will offer this service on a commercial scale to other users but the company’s head of payments noted that “The reality is that the needs of our partners in the US and in Brazil and in Australia and in India mirror in many ways the needs of consumers as well, particularly in the cash-heavy economies.” Digital banks are also on the increase across world and Africa is not exempt.
The other big opportunity from the new Uber Money is that Uber which is in over 60 countries and 400 cities in the world and with over 155 million app installs in 2018 alone can now delve into the remittances business. Uber has the platform to do this across nations easily using its platform in a growing market.
According to the World Bank, in 2018 overall global remittance grew 10% to US$689 billion, including US$528 billion to developing countries. Overall global remittance is expected to grow 3.7% to US$ 715 billion in 2019, including US$549 billion to developing nations.
Traditional banking is currently being disrupted globally by big tech and the Uber announcement is just adding to the growing list of companies looking to play in this space.