Payments

Uber is launching a credit card

  • Uber has given the financial services world a glimpse of how fintech should be, by making payments invisible; now it's replicating that to points redemption
  • The forthcoming Uber card is as much a data play for them to get to know customers better as it is a payments play; after all, it's still just another credit card
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Uber is launching a credit card

Uber is going to get to know its customers a little better thanks to its new partnership with Barclaycard U.S., which will issue new, Uber-branded credit cards.

“The seamlessness is predicated on how easy it is to get out of an Uber and pay,” said Judy Zhu, Uber’s U.S. fintech and loyalty partnerships lead. “No matter where you are in the world in the 600 cities we’re in, Uber pretty much feels the same. We’ve now started to focus on the reward aspect of how to link Uber to your outside world, to the things you’re doing before and after an Uber ride.”

For most Uber customers that includes spending at restaurants and bars, travel and shopping. So Uber’s annual fee-free credit card incentivizes them to do more of those things and as a result, use Uber more to get them to those experiences. It offers four percent cash back on dining purchases, which includes UberEATS; three percent on hotel and airfare; two percent on online purchases, including Uber rides; and one percent on everything else — that is, purchases made with the physical card.

It’s a perfect reminder of how a major brand that customers like interacting with can use custoemrs’ transactional data to curate experiences that steal their attention away from bank brands, moving the financial services aspect of the interaction to the background. Barclays’ U.S. business has always been a partner-first bank, said Denny Nealon, Barclays head of U.S. partnerships.

“It’s never been about our brand, but our partners’ brands,” he said.

What’s really new, however, is that the experience is built natively into the Uber app and points are posted and available for redemption in the Uber app — immediately.

“You’re going to be in the Uber app and never [have to] leave the Uber app,” said Kirsten Osland, Barclays’ director of U.S. partnerships, adding that Barclays has been “pushed to focus on customer experience, simplicity and timeliness. You’re going to be able to do this from start to finish to the point where you’ll be charging on your card in an Uber.”

It’s one step closer to what has been perhaps the holy grail of fintech: is to transform financial services so customers never need to know they’re interacting with their finances, suggested Arman Zand, head of portfolio engagement at Quona Capital.

Along with name and Uber ratings, Uber users and cardholders will soon also see their points balance.

The onboarding process happens in Uber too. When users open the app they’ll be prompted at the bottom of the screen to learn more and apply for the card. Any basic information Uber already has on the customer appears in pre-populated fields leaving the customer to enter only what’s absolutely necessary, like a Social Security number. A decision should be ready within just a couple of minutes.

“Nobody is in Uber hanging out doing things playing around, you’re pulling it up because you’re trying to get home. So between the time you turn on your app and get a ride and get to your destination you should be finished with your process for applying for a card,” Zhu said.

Zhu maintained that Uber is still a transportation company, not a payments company. Launching a card grew out of a desire to add value to the ride sharing experience, not the need to think about a payments strategy.

“We never said we were an expert in payments, our focus was on revolutionizing transportation. A big aspect of that is the magical moment when you step out of your Uber, so we naturally started seeing role payments play,” she said.

How people choose to pay for Uber was a big part of the thought behind how to reward them. There are lots of card products in the market today, Zhu said, but for Uber to play within those confines wouldn’t have allowed it to add value to its customer relationships by learning what else they do when they’re not in an Uber.

As part of the perks attached to the card, Uber will push exclusive events and experiences to customers in certain cities — like secret concerts, secret shows, private dining experiences with top chefs. The company already knows where its customers are and will be able to serve events to them, rather than put the onus on them to go to some event or ticketing site to see what’s going on at a given time. The transactional data will inevitably help them tailor what experiences they push.

Customers also receive a $50 credit in subscription services after spending a certain amount in a year and mobile phone insurance up to $600.

Innovative as Uber has been, by making payments invisible and now by speeding up the on boarding and points redemption process, it’s also underlining the fact that most payments today still happen through cards. Peer-to-peer payments brands Square Cash, Apple Pay and Venmo all have mobile interfaces, but the payments themselves are still card payments (and they’ve all introduced plastic prepaid cards this year to bridge the adoption gap between physical and mobile payments).

Barclays wants to eventually provision the card directly into other digital wallets, Nealon said.

“Uber is all about on-demand experiences,” Zhu said. “What we want to realize is the on-demand aspect of getting that card. You’ll still have to wait seven to 10 days to get the physical card but we can instantly provision the card so you get immediate use of the card added to your Uber riders’ app and use in Eats. To the extent that you’re calling the car and applying for the card, by the time you get home you should be able to get your four percent cash back on the dinner order you just made on Uber Eats.

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