One of many news items about Lyft this week, as it prepares to go public, is a discussion of its new, free checking account that it is offering its drivers through a benefits package called Lyft Driver Services. The salient points regarding the account as described in an article from The Verge:
- Lyft is offering several perks to drivers to be competitive with Uber and other ride-hailing platforms.
- The financial services offering includes a free checking account and a debit card.
- The debit card offers some compelling rewards including 4% cash back at restaurants, 2% on gasoline and 1% on groceries.
- The issuer is Stride Bank, NA, a $660 Million asset-sized bank in Oklahoma.
The ride-hail (and soon-to-be publicly traded) company unveiled a broad set of new economic incentives for drivers, including no-fee bank accounts, debit cards, vehicle maintenance, and deals on rental cars. Lyft will also be opening a series of brick-and-mortar repair centers across the country where drivers can get discounts on maintenance and car washes.
It’s a way for Lyft to help drivers save money without actually increasing fares (which could drive down demand) or decreasing the percentage of each payment Lyft takes for itself (which would reduce its revenue). And like most driver-focused announcements from ride-hail companies, it’s intended to encourage drivers to quit app-switching and just pick a side.
“Our primary aim,” said Jon McNeill, Lyft’s chief operating officer, “is to increase [driver] pay and for us to become the platform of choice for drivers.”
Uber also offers its drivers banking services. Since many drivers work for both brands, it will interest to see if a better banking deal attracts more drivers, or if a first to market advantage is more powerful.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group