Earlier this year, ride-hailing giant Uber started allowing its drivers to get paid daily, or even several times a day, rather than weekly — but only if they had accounts with GoBank, a unit of Pasadena prepaid debit card issuer Green Dot Corp.
Following the introduction of that program, called Instant Pay, about 80,000 Uber drivers signed up for GoBank accounts, many of them presumably to take advantage of the new payment system.
But GoBank is no longer the only game in town. Green Dot and Uber said this week that drivers can now instantly cash out their pay to just about any bank account with a Visa, Mastercard or Discover debit card.
That’s a feature Uber’s chief rival, Lyft, started offering late last year to drivers eager to speed up their payments, said Harry Campbell, who drives for both ride-hailing firms and blogs about the industry on TheRideshareGuy.com.
He noted that while he’s used Lyft’s instant payout feature, called Express Pay, he had not used Uber’s, largely because he would have needed to open a GoBank account.
“I didn’t want the hassle of setting up a different account,” Campbell said, noting that he’s likely to use the feature now that he can link it to other accounts.
While the change means that Uber drivers will have less incentive to sign up for GoBank accounts, Green Dot isn’t out of the picture entirely.
The company will continue to process instant payments for Uber drivers and get a slice of the 50-cent fee drivers have to pay if they want to cash out into anything other than a GoBank account, said Mike Panzarella, a Green Dot senior vice president.
What’s more, Uber will continue to market GoBank accounts, offering them to would-be drivers who don’t have bank accounts already.
The company also hopes to make similar arrangements with other companies that, like Uber, rely on freelancers. That could include firms such as courier service Postmates or on-demand restaurant delivery service DoorDash, although Panzarella declined to name specific companies Green Dot might seek to work with.
“Our goal is to continue to expand across the sharing economy,” he said.
Fintech out of fuel?
The second quarter has been rough for financial technology start-ups, with far fewer of them raising money from investors, according to a report out this week from consulting firm CB Insights and accounting giant KPMG.
The most recent edition of their quarterly Pulse of Fintech report, which tracks investments in financial technology companies, shows that from April through June, North American fintech firms raised $1.3 billion in 97 deals, down from $1.8 billion in 130 deals during the first three months of the year.
The numbers look even worse compared with the second quarter of last year, when companies raised $2.5 billion in 131 deals.
Behind at least part of that dip in funding is the ongoing shakeout in the online lending business, which makes up a big part of the fintech sector.
Since the beginning of the year, investors had raised questions about the quality of loans arranged by so-called marketplace lenders, such as San Francisco’s Lending Club and Prosper, forcing those firms to slow down loan production.
In May, Lending Club dismissed its chief executive and acknowledged problems with loans sold to an investment bank, sparking further concern.
Conor Moore, a partner at KPMG, said all that continues to worry investors, keeping them from making new investments in the space.
Many investors “are waiting on the sidelines to see what will happen,” Moore said in the Pulse of Fintech report. “This is particularly the case in marketplace lending, which has been rocked by a number of potentially damaging setbacks.”
The Oracle of L.A.
In finance circles, Howard Marks is known not only as one of the founders of downtown L.A. investment firm Oaktree Capital Management, but also as a guru of sorts who dispenses sage commentary on investing, the economy and other subjects.
(Oaktree is a major shareholder in Tronc Inc., which owns the Los Angeles Times.)
Marks’ commentary comes in the form of memos, which he typically dispatches to Oaktree clients each quarter and have gained quite the following. They’re often picked up and analyzed by the Wall Street Journal, Barron’s and other finance publications.
Even Warren Buffett, known as the “Oracle of Omaha” for his wizardly stock picks and famous annual letter to shareholders, has said he’s a fan.
Now, in the midst of the heated presidential campaign, Marks has broken form and taken on GOP candidate Donald Trump.
In some ways, it isn’t surprising. While Marks has donated to Republicans, he generally gives to Democrats, including to Democratic presidential nominee Hillary Clinton.
Still, Marks typically doesn’t call out one candidate or another. In 2008 and 2012, his memos barely mentioned the presidential candidates.
But in the new memo released Wednesday — titled “Political Reality” and focused on the causes of and potential solutions for political dysfunction — he devotes two of its 16 pages to how Trump’s statements on the economy don’t add up.
For instance, he writes that Trump’s position that China is destroying American jobs ignores the fact that U.S. consumers have benefited from inexpensive Chinese goods while the loss of manufacturing jobs is more the result of automation than overseas manufacturing.
Marks goes on to say that Clinton “has her own shortcomings as a candidate,” noting that she has adopted positions that, to him, seem like pandering to Bernie Sanders supporters. Still, he said it seems to him that Clinton “hasn’t been anywhere near as guilty as Trump of defying economic reality on the campaign trail.”
Marks closed the memo with a post script, saying he has “tried hard to stick to matters of economics and fact, rather than non-economic policy or programs, opinion or personal preferences. I’m sorry if my statements cause unhappiness.”
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