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In a move to appease a growing portion of its active drivers, Uber announced today a pilot program called Instant Pay that allows drivers to immediately access cash they’ve earned, using a third-party mobile banking service called GoBank.
Available only in select cities to start, the program arrives a little less than three months after competitor Lyft launched a similar service called Express Pay. According to Lyft’s director of operation strategy, David Rust, 35 percent of the company’s driver base have already used Express Pay, and to date Lyft has paid out $100 million in driver fares through the service. It’s so popular among drivers that in just the last 30 days, Rust said, the company has paid out $40 million in driver earnings.
“With any product that launches, if one-third of the entire user base is using it, it is a resounding vote of confidence,” Rust told Re/code. “This is unlike any uptick in utilization that we’ve seen with products we’ve launched previously.”
As with Uber’s Instant Pay, Rust says Lyft’s product was developed and launched in response to growing driver demand. It’s a clear move on both companies’ parts not just to ensure driver satisfaction and thus retention but also to attract new drivers. But the two services work fairly differently.
To use Uber’s service, drivers have to apply for a GoBank account, where their fares will be deposited and available for withdrawal via debit card at one of GoBank’s 42,000 ATMs. There are no minimum amounts that drivers have to earn or additional fees that drivers have to pay to cash out. The obvious catch, however, is those drivers who already have a bank account now have to create a new one, and there’s no way to determine a specific amount to transfer to this new GoBank account.
Lyft’s Express Pay, on the other hand, was created in-house with payments company Stripe and is directly linked to drivers’ bank accounts. For Express Pay, however, drivers have to have a minimum of $50.00 to cash out and must pay a 50-cent transaction fee on each cash-out. But, according to Rust, Lyft hasn’t heard many complaints about the fee.
Uber Instant Pay has yet to be integrated seamlessly within the Uber partner app, but it does present the company with a unique opportunity to attract drivers who may not have a bank account. GoBank, which also works with Walmart, does not conduct credit checks and typically will approve users instantly.
For both Uber and Lyft, retaining and attracting drivers is a crucial aspect of gaining a bigger share of the market. One way to attract drivers is to appeal to consumers. But as it turns out, keeping those drivers around takes both supplying them with customers as well as added perks. Uber following Lyft’s example of creating an on-demand cash-out service is in part an acknowledgment that the feature gave Lyft a competitive edge in the battle for drivers.
This article originally appeared on Recode.net.
