Green Dot’s New Test With Uber Drivers Could Drive Traffic to Its Bank

Prepaid card provider Green Dot Corp. on Thursday announced a test with ride-sharing service Uber in which Uber drivers can be paid instantly via deposits into Green Dot’s subsidiary bank.

Drivers for San Francisco-based Uber normally are paid once a week via direct deposit into financial accounts on file with Uber. The new service thus could improve cash flow for people who drive for Uber at the times of their choosing because they have a pressing need to quickly earn extra money or otherwise want to supplement their incomes.

“Drivers say they’d like to have the flexibility to decide when to get paid too,” said Wayne Ting, Uber’s general manager for the Bay Area, in a statement.

Dubbed by Uber as Instant Pay and Green Dot as Uber Checking by GoBank (GoBank is Green Dot’s mobile-banking brand), the service gives Uber drivers what Green Dot calls a “special kind of business checking account.” Drivers in the test will get a Green Dot Bank account with a debit card. Accounts have an $8.95 monthly fee, but the fee is waived for six months every time the driver receives an Uber direct deposit.

Drivers can get cash without paying a fee at any ATM in Green Dot’s network; out-of-network withdrawals cost $2.50. Account holders can deposit cash at no charge at Wal-Mart Stores Inc. locations, or for a fee at other Green Dot partner retailers.

Until now, other so-called ride-sharing services have offered faster payment than Uber, but charge more fees. Arch-competitor Lyft, for example, recently launched an-instant pay program that requires drivers to deposit at least $50 and charges 50 cents for each deposit, according to the Associated Press.

Consumers book Uber rides and pay for them through Uber smart-phone apps. Drivers have their own version of the app, into which the GoBank service can be integrated.

Pasadena, Calif.-based Green Dot, which is under pressure from an activist investor to increase earnings, will generate revenues from Uber accounts in much the same way it generates revenues from other accounts, according to a spokesperson. That includes monthly fees (when they aren’t waived), out-of-network ATM fees, and interchange from debit card purchases.

“It’s important to note that our most proftable customers are direct-deposit customers who use our products as their primary account and don’t pay us any monthly fees,” the spokesperson tells Digital Transactions News by email. “In the case of this Uber account, this is a business checking account, not a personal checking account, and therefore interchange earned on debit spend is about two times what we earn on the personal version.”

The service gives Green Dot a toe-hold in the booming “on-demand” economy. And should the instant-pay service be expanded nationwide, Green Dot has the potential to convert some 400,000 active Uber drivers, a figure from the AP, into depositors. The company doesn’t disclose its current number of bank depositors.

“While we don’t expect revenue from this new partnership to be material to our 2016 financial guidance, we believe the Uber partnership is an example of the kinds of opportunities we have in serving America’s fast-growing on-demand workforce with our market-leading fin-tech banking products and payment solutions,” Green Dot chief executive Steve Streit said in a statement.