For just about anyone participating in the on-demand economy—from Uber drivers to Airbnb hosts—there’s always one major question: When will I get paid?
And in many cases, it’s more a matter of having access to funds they’ve already earned than customers paying them for their services. Between ACH transfer delays and bank clearing policies, it can be days (or sometimes weeks) before on-demand workers gain access to their money. This can negatively impact workers’ ability to budget, pay bills and meet their daily living expenses.
That’s precisely when Uber recently decided to partner with Green Dot, a financial services provider specializing in the issuance of pre-paid debit cards. In March 2016, Green Dot and Uber announced the introduction of “GoBank,” a mobile checking account solution for Uber drivers that provides them with access to cash from their Uber accounts almost instantaneously.
At its core, the GoBank concept allows Uber drivers to withdraw cash from their Uber accounts while the transactions are clearing. Green Bank is basically fronting drivers the funds until the transactions have cleared. Drivers can spend the money using an Uber Debit Card wherever Visa is accepted, or withdraw cash from any GoBank’s 42,000 ATMs nationwide without incurring any fees. The debit card is also linked to a small business checking account provided by GoBank, which focuses on mobile banking functionality first and foremost. Another feature called Instant Pay allows drivers to link a GoBank checking account with their Uber account and transfer money immediately into their checking up to five times per day.
These kinds of solutions are in line with Green Dot’s over-arching goal, which is to service the underbanked and low credit score sector of the population by partnering with major brands. For example, Green Dot recently teamed up with Wal-Mart to offer the Wal-Mart Everyday Visa Card. The goal of deals with the likes of Uber and Wal-Mart, according to Green Dot CEO Steve Streit, is to deepen the company’s ties with at least half of all U.S. households that earn less than $50,000 per year. Increasingly, Green Dot is focusing on enhancing its traditional mix of products and services with mobility and mobile solutions, which is one of the reasons that partnering with Uber makes so much sense.
Green Dot’s commitment to mobile goes all the way back to 2012 with the acquisition of a mobile app development company called Loopt. The underlying Loopt technology was utilized to develop the GoBank mobile banking solution. Outside of the ATM network, GoBank has no brick and mortar locations, making it a completely digital bank focused on mobile as its primary distribution channel. That means users can perform unique functions like check their account balance without having to log in, send money via SMS and open a new account solely through the mobile app. This focus on mobile solutions for the underbanked positions GoBank to be an extremely useful partner to Uber and its drivers moving forward. Drivers can even open a GoBank account from within the Uber app itself.
Uber, as the world’s leading ridesharing service, is pushing to streamline its relationships and processes with both drivers and customers, and overcome recent public relations issues. Competition for drivers has been heating up with major rival Lyft, which announced its own proprietary driver cash-out solution called Express Pay, shortly before Uber and Green Dot unveiled the Uber Debit Card by GoBank. Express Pay experiences heavy volume, with upwards of $40 million being cashed out by drivers in any given month. Uber no doubt is expecting Instant Pay to eclipse that number rather quickly, since it still has the lion’s share of drivers signed up to its app nationwide.
Uber began piloting the Uber Debit Card by GoBank shortly after announcing its partnership with Green Dot, and the solution managed to gain significant usage amongst drivers in a relatively short amount of time. This led Uber to open the program to all its drivers nationwide in June 2016, with over 100,000 drivers signed up for the Uber Debit Card by GoBank by August. The positive feedback is leading Green Dot and Uber to extend the functionality of the solution, with the availability of Instant Pay for any checking account (GoBank or otherwise) being one new feature in the development pipeline.
Getting paid in a timely manner has been a longstanding issue for drivers who rely on income from ride-sharing apps like Uber. And it’s clear that Uber understands this by aligning itself with an industry leader in financial services for the underbanked like Green Dot. By allowing these drivers to easily open an account, access funds and make payments (all on the go via mobile), Uber is likely to go a long way towards improving its relationship with drivers. It’s a boost the company could use to alleviate some recent friction with drivers, with some filing lawsuits and others wanting to be recognized as full-time employees. However, the Uber Debit Card by GoBank is already incentivizing drivers to remain on the platform, and should also help make their financial lives a lot easier.
This is one of 10 case studies that focus on examples of successful innovation between banks and financial technology companies working in partnership. The participants featured in this article were finalists at the 2017 Best of FinXTech Awards.