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Uber recently sent out an in-app survey to some drivers that indicated the company is starting to build a “new financial product” designed to help Uber drivers “in a time of need.”
It seems that ride-hailing titan decided to change by its course of view a bit, by directly offering financial loans to its drivers. Last week Uber cast an in-app message to some drivers with an explanation about the company trying to “build a new financial product” to help their drivers with their finances “in a time of need,” and asked recipients to fill out a survey.
One of the questions was regarding loans (below $1000) the drivers might have sought during the last three years. Another question asked directly was what amount would be the most convincing for drivers if provided by Uber. The options to answer range in groups of “Less than $100,” “Between $100 and $250,” “Between $250 and $500,” and “More than $500.”
However, the fact that Uber considers offering financial loans is actually not new. Back in 2016, the company gave a test-trial with an interest-free cash advance program for drivers in California and Michigan. Right now, they offer a co-branded credit card with Visa and also an Uber Cash digital wallet for riders. Also, they are helping drivers to lease cars through third-party partnerships.
Still, prospective move to offer smaller payday-type loans to drivers encouraged some politicians and drivers to criticize the company. Bear in mind that many drivers are severely in debt and struggling to make ends meet.
Also, they are especially doubtful regarding the fact that Uber and its ride-hailing competitor Lyft are spending tens of millions of dollars to fight California legislation that could oblige companies to give their workers a minimum salary and other employee rights as is sick leave for example. Uber declined to comment.
Mostafa Maklad, an Uber driver in San Francisco and organizer with the group Gig Workers Rising thinks that instead of giving drivers’ loans, they should increase their payments. He added he has no plans to take out a small loan but if he did, he “wouldn’t trust a company like Uber”.
One thing is certain – if Uber succeeds in their idea of offering small cash loans, they for sure won’t be the only one. Among big companies, there is Walmart who already offer payroll advances and loans to their own poor employees, with interest rates differing from 6 to extremely high 36 percent.
And let’s not forget that there are a lot of other payday-type loan services who precisely choose ride-hail drivers who might need money in order to cover prompt expenses, including to fix the cars they drive for work.
Author of California bill AB 5, Lorena Gonzalez last week tweeted:
— Lorena (@LorenaSGonzalez) September 5, 2019
Assemblywoman Gonzalez said in an additional statement:
“I think anytime an employer, especially one that already skirts labor law, offers their employees loans, we are wading into very dangerous and oppressive territory.”
For now, it’s not known if Uber will succeed in their intention of launching the new financial product, and also, nothing about it is not said yet – nor the conditions nor the interest rates.
Let’s just not forget that back in June, Uber hired more than 100 fintech-oriented tech workers to apparently look at creating products to increase loyalty and engagement among users and drivers, including things like banking. With the FinTech team that big, it’s pretty sure that this isn’t the end of us hearing about Uber’s provisional moves into this sector.
At the time of writing, Uber stock fell by 2% to $31.86.