Ride-sharing giant Uber is expanding its financial services efforts with a newly hired team in New York. FinTech executive Monica Eaton-Cardone says the move is intended to further integrate payments into Uber’s business.
TAMPA BAY, Fla., August 6, 2019 /PRNewswire-PRWeb/ — During a recent recruitment event, Uber announced plans to accelerate the growth of its sideline business in financial products by opening a new fintech office. Uber intends to hire a number of product managers and engineers between now and the end of 2019 for a New York City-based corps of employees. Monica Eaton-Cardone, an entrepreneur and IT executive specializing in risk management and fraud prevention, said that Uber’s move into financial services mirrors what other companies including Amazon have done in recent years. Uber’s primary goals are to encourage customer loyalty within its rideshare and food delivery businesses and help contractors manage earnings, Eaton-Cardone said.
“In essence it’s a move to integrate payments further into the business by eliminating the middleman in the form of payments processors,” she said
Among the potential beneficiaries of Uber’s expanded fintech activity could be participants in the gig economy. According to a job posting for a new engineering manager, Uber is interested in helping its network of independent contractors better manage their money. While it is estimated that as many as 20 percent of the full-time U.S. labor force will consist of short-term independent contractors by 2020, few traditional financial institutions offer services specifically tailored to this population’s needs. Uber, which already has a program in place to help its drivers and food deliverers access an individual retirement account or Roth IRA, would be well positioned to offer further financial services to its own workers.
In addition to helping it compete for labor with Lyft, another rideshare company that already offers a rewards debit card and no-fee bank account to its drivers, Uber’s move into fintech could reduce the amount of money spent on fees for processing credit card transactions. While it has not disclosed the size of its credit card processing outlay for 2018 (during which time the company accepted $43.5 billion in credit card charges), Uber’s outlay for credit card processing was $749 million in 2017, 62 percent above the $461 million total for 2016.
“Uber’s end game may be to establish financial services and fintech as a separate arm of the company, as Asian rideshare firms like Ola and Grab have done,” says Eaton-Cardone, who serves as chief information officer (CIO) of Global Risk Technologies and chief operating officer (COO) of Chargebacks911. “From a business perspective, it could make a lot of sense. I think the main obstacle will be getting customers to engage. Brands are essentially asking buyers to transition to a new payments model where they keep multiple, decentralized bank accounts with different retailers. The challenge to Uber and other U.S. companies will be to overcome consumer skepticism. While American consumers love convenience, they’re generally not willing to hand over as much data as might be required.”
Date: August 08, 2019
Source: Yahoo Finance