Uber has launched a new driver-focused program that provides cash advances when needed. The on-demand private car service has teamed up with financial service provider Clearbanc for a program called Advance Pay. This program allows drivers in California and Michigan to borrow up to $1,000 with no interest.
In a Medium post, regional general manager Rachel Holt cited a study by the U.S. Federal Reserve that found 47 percent of people in the country “struggle to handle an unexpected bill costing $400, with a third saying that they would be forced to borrow to pay.” Uber bills itself as providing great benefits to those looking for work or in need of extra income, and it sees Advance Pay as one solution to that problem.
Not every driver will be eligible for an advance, and the company declined to state what all the specific criteria were to be enrolled, but we know that it’s only for new drivers. However, those who participate in this program can receive up to $1,000 in cash, with some of the funds delivered up front and the rest being disbursed after they’ve taken their first trip as a driver.
The money is provided through Clearbanc, and drivers have up to 15 weeks to repay the advance either directly to the provider or through their weekly Uber earnings. During the pilot program, all automatic payments will be capped so that drivers won’t ever have more than half of their earnings deducted automatically. There are no requirements for how often someone has to drive. After the 15 week period is up, delinquent borrowers can be assessed a fee of up to $50 by Clearbanc.
There was a previous association between Uber and Clearbanc, a graduate of Y Combinator’s fellowship program, but this is the first official partnership between the two. Drivers could link their account to Clearbanc and get their earnings transferred into a Visa debit card. For that, Clearbanc charges $2 each day that it deposits funds into a driver’s account.
In March, Uber launched its Instant Pay option, which allows San Francisco drivers to do pretty much the same thing as they had been able to do with Clearbanc. However, in this instance, Uber partnered with GoBank, and there aren’t any minimum deposits or transaction fees incurred. Holt revealed that this pilot program “has been popular so far” and said the company plans to make it more widely available soon.
As the ridesharing war between Uber and Lyft continues to heat up, both companies are pulling out all the stops in their efforts to entice and retain drivers, and it largely comes down to benefits. Lyft has recently introduced its version of instant pay, powered by Stripe, along with partnerships with Hertz and Shell.
Updated on 8:25 p.m. Pacific on Wednesday: This post has been updated to reflect that drivers have up to 15 weeks, not days, to repay their advance.