For gig economy workers who front their own costs, getting paid quickly is a paramount concern. A week after Lyft announced an instant payment program for drivers in partnership with Stripe, a startup is making its own debut with a similar service for Uber drivers.

Clearbanc, part of the first cohort of the Y Combinator Fellowship program, is offering instant pay on a Visa debit card starting this week. Drivers who opt to use the card pay a $2 fee each day they receive payment and can opt out of the program at any point.

The card is just the first product the six-employee startup is rolling out. Clearbanc’s aim is to become a bank for freelancers, offering lines of credit and budgeting advice in addition to the debit card, according to founder and CEO Andrew D’Souza.

“We though that there really should be a bank or a financial institution meeting the needs of freelancers and self-employed professionals,” says D’Souza.

The card is still in a pilot phase, with about 200 Uber drivers being on-boarded as users this week. D’Souza says he expects the card can be made available to a few thousand people in the next couple months. Ultimately, Clearbanc plans to make the product available to any kind of freelancer, Lyft drivers included.

Lyft’s recently announced instant payment option allows drivers to hit a “cash out” button in the Lyft driver app for immediate payment as long as the driver’s account has at least $50 in pending pay. The company is piloting the program in the San Francisco Bay Area before an anticipated rollout across markets nationwide.

This isn’t the first card offered to Uber drivers. Uber offers fuel cards issued by Mastercard and FleetCor that allow drivers to get discounts on fuel. The credit cards allow for up to 15 cents in savings per gallon.

Clearbanc doesn’t have a partnership with Uber, though the company knows of Clearbanc’s offering, says D’Souza.

The San Francisco-based, Canada-incorporated startup works the way a normal bank does in terms of deposits. Bank users provide Clearbank routing and account numbers to their employers, who then make deposits. The instant pay feature relies on the bank advancing money to users once it knows how much their employers are expected to pay. Uber drivers using the card enable this feature by granting Clearbanc access to their dashboard on the driver app.

Growth in the number of users will be restricted by Clearbanc’s ability to advance funds, says D’Souza. The company will have to rely on its own funds until those funds are replaced by payments from employers.

Looking beyond the debit card, D’Souza says Clearbanc aims to tailor its services to the unique needs of freelancers. Living on potentially irregular cash flows, freelancers need to budget differently than people with regular incomes from traditional employers. Freelancers may also qualify for lines of credit based on different criteria than people in more traditional work setups - for example, access to credit might be determined in part by how reliably the freelancer fulfills work commitments.

“We want to basically build like a full service financial institution designed to meet the needs of this sort of new generation of self-employed workers,” says D’Souza.

 

Published on: Oct 15, 2015