How Do Uber Payments Work
A few years ago, a small San Francisco app took the ground transportation industry and transformed it completely. Now that it is operating in hundreds of cities around the globe, it is hard to imagine a world before Uber. In this article, we will take a look at how Uber payments work for drivers.
Uber changed the taxi industry game by offering prompt, convenient service with automatic payments. On the UberX app, one click of the Request button quickly connects users to the nearest Uber driver. Once arrived, the rider knows exactly what he is paying and the UberX driver knows exactly where he is going.
Uber has also added other convenient services, depending on what city you are in. UberPOOL offers rides at a discount if you are willing to share the car. UberCOMMUTE offers a flat rate for a specified pickup and drop off area during rush hour. With UberEATS, a driver will happily pick up takeout for you at your favorite restaurant.
Uber has changed the game for drivers as well. Uber drivers choose their own hours, are able to use their own cars and do not have to pay for branding that car. The Uber app also accommodates drivers with disabilities. For example, the Uber app will advise you that your driver is hearing impaired. Because Uber has a navigation system, the driver and rider are not required to speak, facilitating working for deaf or partially deaf drivers.
With the many advantages and the flexibility of working for Uber, many people may be interested in becoming Uber drivers, whether full-time or part-time. After all, many Uber drivers will simply turn on their app when they are driving anyways, for instance on their commute home. But how do Uber payments for drivers work? Well, let’s take a look.
Many independent contract employees provide a service and pay a commission to a blanket company for providing them a platform to do so. For instance, a barber may “rent” a chair in a barbershop. For the barbershop, this works out well as they have a quality employee who essentially pays them to work there. For the employee, it also works out well. The barber does not have to pay rent on his own shop, pay utilities or pay for advertising. Like many other types of contract employees, Uber drivers pay a service fee to Uber. This fee covers :
- Use of Uber software
- Collection and transfer of fares
- Credit card processing
- Customer invoices
On top of this, it offers an instant connection to the biggest network of riders. The fee for drivers is currently 20% but will change to 25% as of January 18, 2017. There is no fee associated with joining Uber as a driver so only this commission fee will be charged. Of course, this means that for every $100 an Uber driver makes, they pay Uber $25. On top of this, Uber drivers need to own a vehicle, pay their own gas, taxes, and insurance. Still, statistics show that Uber drivers make an average of about $25 per hour.
The driver also benefits from a detailed pay stub, which not only shows the hours worked and kilometers traveled, but also a detailed summary of user ratings of the driver. This is handy because it allows drivers to see where users feel they need to improve. For example, if the driver is consistently scoring low on car cleanliness, they will be able to see that and work to improve it. This is important as Uber drivers with consistently low ratings can be suspended and be required to attend retraining sessions.
The commission to Uber is the same during surge pricing. So, the more expensive the ride, the more money the driver is making. The commission is also applicable to each rider’s fare separately on UberPOOL rides.
UberSELECT is a service where a fancier, black car will drive riders home. To mediate between taxis and Uber, airports often only allows the UberSELECT function on the Uber app to work, leveling the playing field for cab drivers. UberSELECT usually costs around double what a regular UberX costs. Although fares are much higher, Uber takes a 30% cut of UberSELECT driver’s earnings. In addition, only certain makes of cars are considered appropriate for UberSELECT so the initial investment is more expensive. Typically, insurance is more costly as well.
Until recently UberEATS drivers were being paid a $6.50 flat rate, plus $1.85 per km traveled. Uber would take a commission similar to what it takes from regular UberX drivers. However, they recently reduced the price drastically to $2.90 a pickup and $2.50 a delivery, which UberEATS drivers are protesting as being unfair.
Drivers are paid weekly on Mondays and usually the payment will show up in their bank account by Thursday morning. This is a nice feature, as Uber drivers will not have to wait a full two weeks for payment. Uber is also currently exploring some “pay-on-demand” or “instant pay” systems, which would function, similarly to PayPal, where drivers would be able to withdraw available funds or a portion of their pay as needed.
Uber does not currently offer benefits to its drivers, but there are rewards associated with being an Uber driver. These include discounts on the driver’s phone bill, automotive parts and labor and local deals that vary from city to city.
Uber is now a world-famous platform and is synonymous with ease and convenience. They have also modified the transportation industry making it easier and less expensive to get into as a career option. Although Uber awards itself a generous commission, which differs from service to service, drivers enjoy flexibility and freedom. They also gain access to the single most used taxi app in the world. Their ability to make money depends largely on their willingness to work and their availability during typical surge periods.
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