Anyone who's ever freelanced knows the biggest headache of being your own boss is trying to get paid. During my own freelancing days, a magazine once forgot to pay me until, months later, I found the invoice while in the process of invoicing them for another piece. It can be extremely stressful when trying to budget, and with the rise of the sharing economy, more and more people are now opting for self-employment and experiencing this fresh hell for the first time.
Rideshare drivers shuttling passengers for companies like Uber and Lyft are no exception, and many of them have dived into the world of self-employment with no previous experience. Now, tech startups and trying to try to bridge that knowledge gap with products specifically geared to freelancers, including Uber drivers.
"As a startup, you kind of have to focus on an individual customer set. Uber has over 1 million drivers, they're growing quickly, and they all have a similar set of needs when it comes to financial services," said Andrew D'Souza, the founder of Clearbanc, a new financial tool specifically aimed at Uber drivers. "We thought that was a logical place to start."
Clearbanc works as a kind of micro cash advance: Uber drivers link their account to Clearbanc, and at the end of each day they get the money they've earned driving transferred to a Visa debit card. There's a $2 fee for each transaction, though drivers aren't charged anything on days they don't use it (so if you want to only cash out every other day, or every three days, you'd only have to pay that $2 fee once each time you cash out). Right now, Uber drivers get paid by Uber about once a week (though the pay period is sometimes a bit longer, depending on the area), according to Harry Campbell, an Uber and Lyft driver who runs a blog on rideshare driving.
"A lot of drivers are, frankly, living paycheck to paycheck. They need this money," said Campbell. "They need the money to pay bills, loans, new car repairs, whatever it is."
Clearbanc won a coveted slot in the Silicon Valley startup incubator YCombinator's new fellowship program, aimed specifically at very-early-stage startups, and the team behind it has spent the last few weeks honing in on the Uber pay transfer as its first foray into financial services.
D'Souza said this is just the first offering from what he hopes will become a suite of financial services for freelancers and people who are self-employed, particularly in the so-called sharing economy, including a system for helping calculate and set aside tax payments.
D'Souza says he's gotten good feedback from Uber drivers so far. A trial Facebook ad campaign drew so much attention before the product was really ready that Clearbanc had to cancel it early, D'Souza said.
Clearbanc isn't the first company to identify this need: Lyft announced earlier this month it would now allow drivers to do daily cashouts if they earned a minimum of $50, for a fee of 50 cents per transaction. But will drivers actually adopt a third party app, and pay a possible daily fee, just to get their hands on their money a few days sooner?
Campbell said Uber and Lyft's payment structures are pretty good as far as freelancing goes. Uber, for example, tracks a driver's hours from Monday at 5 AM to the follow Monday (a bit before 5 AM). Payments for that week are then direct deposited in the driver's bank account, which usually takes a day or two depending on the bank. But even weekly payments can be too infrequent if certain expenses crop up and Campbell said he could see some drivers using this to ease the pressure of budgeting on a freelance income.
"The optimal use case might be someone who only uses it once in awhile if they have a sudden bill that comes up," Campbell said. "My personal worry would be that people would start to rely on this and be cashing it out and basically paying two dollars every time they cash out their money as opposed to waiting."
A recent thread on the subreddit UberDrivers was equally skeptical over whether this was a necessary or the best solution.
"I don't know how I can get paid easier or faster. I have a bank account and the money goes in automatically and is immediately available," one user wrote.
"They will direct deposit your daily earnings, but charge a hefty $2 a day," another redditor commented. "That means you'll get charged $60 bucks [sic] a month for this on top of other administrative fees. wow, that's a full day of driving in some markets that goes just to pay them."
But Clearbanc's future offerings may appeal more to drivers: Campbell told me taxes can be particularly headache-inducing, especially for first timers, and tax-help specific for Uber drivers is one of the next services Clearbanc is hoping to roll out. Other startups, like Painless1099, have been aiming to fill this specific need, and SherpaShare—a rideshare driver analytics app—has been gaining popularity. The new challenges created by an emerging market like ridesharing provide a ripe environment for even more businesses.
"The idea really resonates with drivers, but they're skeptical," Campbell said. "I have a huge baby boomer audience—30 to 40 percent of my audience is over 50 years old—and a lot of them aren't super technologically savvy. When it comes to giving up their information and integrate their Uber account or bank account, that's the biggest hesitation."