Market Insight

Uber adds financial services to strengthen customer loyalty

November 02, 2017

Ruomeng Wang Ruomeng Wang Research & Analysis Manager, Security - Fintech & Blockchain

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Uber partnered with Barclays and Visa to launch Uber Visa Card, which will be available to apply for from 2nd November 2017.

The Uber credit card will immediately integrate with Uber rides and UberEats purchases. It offers 4% money back on dining, 3% back on hotels and airfare, 2% back for online purchases and 1% back on all other purchases.

Other benefits of Uber Visa Card includes:

  • No annual fee
  • Up to USD50 credit for online subscription services after spending USD5,000 or more per year. (Eligible online subscription services include Apple Music, Pandora, Spotify, Amazon Music, Google Music, Audible, Sirius XM, Netflix, Hulu, HBO NOW, DirecTV NOW, the membership fee for Amazon Prime, and Shoprunner.)
  • A bonus USD100 after appending USD500 on purchases within the first 90 days
  • Up to USD600 insurance for mobile phone damage or theft when paying mobile phone bills with Uber Visa card

IHS Markit understands that the new card will be available in the US only at launch.

Our analysis

Uber Visa Card to complement Uber’s current service offerings   

Uber offers various options for customers to make payments through its taxi-hailing service – Uber – and its food delivery service – UberEats. It allows customers to link their credit cards, PayPal accounts or device-based mobile payments services (Apple, Pay, Samsung Pay or Android Pay) within the app. In some markets, Uber also enables cash payments where card adoption is low. Launching Uber Visa Card not only adds another option for customers to complete their purchases, but is more significantly a step to further strengthen customer loyalty and brings financial services to Uber’s platform through both in-app and in-store purchases.

In addition to increasing incentive offerings and enhancing the payment experience, Uber also aims to access customer information and data to expand its role in online and offline commerce through Uber Visa Card. According to Uber, it reached 40 million monthly active users by the end of 2016. The consumer data collected through Uber Visa Card would identify more opportunities for Uber to explore new businesses and expand its platform of ride-hailing and food delivery services, such as innovating its business model and bringing in new revenue streams.

The combination of financial products and Uber’s knowledge of mobile platforms would give Uber advantages to expand mobile related financial services, such as smartphone insurance and micro-investments. However, Uber needs to keep working on the incentives to convert customers from other payments methods.  Launching Uber Visa Card and integrating it with the Uber app are initial steps to enter into mobile payments market. This is a very competitive market, Uber must expand partnerships and innovate with the integrations between financial services and its service offerings to tie customers to its ecosystem. 

Adding financial services is one of the keys to building a wider ecosystem 

Service providers and platforms are developing financial services to drive overall growth. Device makers such as Apple and Samsung launched device-based mobile payments services – Apple Pay and Samsung Pay respectively – largely to support their hardware businesses. Google’s Android Pay is focused on tying customers into its ecosystem. Social media platforms (Facebook, WeChat and Snapchat), e-commerce platforms (Alibaba and Amazon) and retailers (Walmart and Starbucks) have all invested in and launched mobile related payment systems and financial services that add value to their core services and ecosystems.

Payments and financial services strive to accomplish a variety of roles with the focus changing depending on the business strategies of the platform:

  • Increase revenues: share of revenue from transactions
  • Expand as an advertising platform: use payments and financial services to bring merchants and customers closer, hence to increase advertising effectiveness and value
  • Facilitate customer engagement: integrate payments services to help service providers improve user experience and customer retention
  • Monetise consumer data and information: understand user purchase behaviour to expand service features and explore more opportunities to build a wider platform

Emerging financial services such as Tencent’s WeChat, Amazon Wallet and Alibaba’s affiliate – Alipay – have developed comprehensive financial products with strong user bases to disrupt traditional banking and financial services. This has also encouraged banks and financial institutions to open up to wider partnerships with them and other service providers and platforms. 

 

Geography
UK USA
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