Uber Rolls Out ‘Advance Pay’ To New Drivers In California, Michigan

In lieu of weekly paychecks, both Uber and Lyft have introduced instant payments, whereby drivers can immediately cash out earnings over a certain amount when they please. Now, Uber has taken this concept a step further with Advance Pay, a pilot program launching in California and Michigan.

“We talk to a lot of drivers, and finding more and more ways around when and how to access earnings is a real priority for them,” says Rachel Holt, Uber’s regional general manager.

In this case, those earnings amount to a pay advance of up to $1,000 – for new drivers – through Clearbanc, a financial services platform tailored to independent contractors that offers, among other things, automatic tax deduction and a prepaid debit card synced with earnings.

Clearbanc, which launched in October 2015, aimed its initial offerings at Uber drivers because “there’s a lot of them, they’re growing quickly and they have a similar set of financial needs,” said Andrew D’Souza, Clearbanc’s founder.

As opposed to more traditional credit or payday loan models, Clearbanc does not charge interest. “We have a much better understanding of the needs and the risk profile of our base,” D’Souza says. “We understand the earning capacity and flexibility of a place like Uber, and we take that into account when creating our product.”

The Advance Pay program offers new drivers a portion of the cash up front – between 5 and 25 percent – and the rest up to one business day after taking their first trip. Drivers can then repay Clearbanc directly or set up a portion of driver earnings – between 30 and 50 percent – to be redirected back to Clearbanc over a maximum of 15 weeks. If a balance is still owed at that time, the driver is charged a maximum $50 fee.

“It’s a better deal from the consumer perspective,” adds D’Souza. “Everybody wins in this: We get a new customer; we can be a financial front door for people; and Uber hopes to get a new driver.”

With considerable upfront costs and unpredictable pay, some Uber drivers (and on-demand contractors at large) have struggled to balance expenses like car payments, gas and maintenance with earnings that can vary based on surge pricing and other incidental factors.

“There hasn’t been the same level of innovation in services meeting those needs,” adds D’Souza, referring to the growth in self-employment encouraged by companies like Uber.

Uber hopes that the advance payments can help drivers deal with unexpected financial obligations on a more flexible basis – while also opening up a new pool of prospective drivers. (As of now, the pilot is open to new drivers in California and Michigan only.)

The company does not yet have a timeline for a national rollout, but said its Instant Pay program has been very popular among drivers, and that it’s “hopefully focusing on ways to expand to as many drivers as possible, as quickly as possible,” added Holt.

“This is all part of a growing suite of products to really think about how we provide more and more flexibility,” she said.

Source: San Francisco Business Times, Annie Gaus
Photo: Uber, the car-hailing app service, is making inroads into the delivery market with test services in New York City, Southern California and Washington, D.C. The recent hire of the top Google Express executive might be part of building on that effort. (Victor J. Blue, Bloomberg News)