Uber launches debit card for drivers

BI Intelligence

Uber introduced the Uber Visa Debit Card from GoBank, a debit card geared toward drivers and deliverers that rewards everyday purchases for things like gas and groceries.

There's no minimum balance required to maintain the card, no overdraft fees, and no setup, monthly, or annual fees. Users need to enroll using the GoBank app or online at gobank.com, driving up digital engagement and brand visibility for GoBank.

The debit card offers drivers cash back on everyday purchases.

Gas purchases.Cardholders can earn 3% cash back at Exxon and Mobil gas stations, and 1.5% cash back at all other gas stations.

Car maintenance. Cardholders get 10% cash back on auto part purchases at Advance Auto Parts and participating Carquest Auto Parts locations. Additionally, they will receive a 15% discount on select services at Jiffy Lube.

Other purchases. Users receive 8% cash back when they pay their monthly Sprint bill, and when they make purchases in Sprint corporate retail stores or online at Sprint.com. Cardholders also get 2% cash back for online and in-store purchases at Walmart.

This debit card isn't the ride-hailing company's first push into banking. Last year, Uber launched the rewards-heavy Visa-branded credit card in partnership with Barclaycard, a product that was catered toward its customers, specifically millennials. The card offers cashback rewards on all dining, travel, and online purchases, including Uber rides, and provides 1% cashback on everything else. The rewards can be redeemed in the app as Uber credit, as well as in the form of gift cards or standard cash back.

This offering is a way for Uber to capitalize further on its driver segment. Uber is rewarding drivers for purchases they'd be making anyway, such as gas and car maintenance, which could serve as an incentive and help Uber onboard and retain more drivers. This, in turn, could create more opportunities for business because there would be greater ride availability.

Uber is addressing a gap in the debit card market: rewards. Sixty percent of US adults cite rewards offerings as a reason for adopting a credit card, according to a TSYS study. That could extend to a debit card, especially because debit reward offerings are few and far between. Debit rewards programs that do exist are limited, leaving the majority of debit customers without access to rewards.

Given that debit cards are the most popular US payment method, access to cash back could be extremely appealing to those who are eligible for this card. But rewards are costly — JPMorgan is working to cut $200 million in costs in response to its Sapphire Reserve card, for example — so it's important for Uber to ensure its driver acquisition and retention can offset financing its rewards structure.