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Jonathan Smith, Senior Principal Consultant, Expleo

Jonathan, explains how a single payment platform would allow Uber to own the end-to-end customer journey. It’s not easy. Uber would first need to converge with the financial services sector. But their ambition to become a global mobility megabrand might falter without it.

Uber is one of the remarkable business stories of this decade, ruthlessly disrupting traditional industries supported by transport, whether taxis, bikes or food delivery. In most cities, it’s possible for customers to Uber from the moment they leave the front door, until they sit down in the evening to watch Netflix with a Thai red curry.

However, the experience isn’t quite seamless. Customers still need to pay for different elements of their day separately. With a single payment platform, customers could pay for it all in advance, making them more likely to use Uber throughout. Naturally, this would hand Uber a clear advantage over their competition. Without it, total market ascendency is going to prove very difficult to secure.

Personally, I don’t think they’re too far away – but then the final steps to the summit are often the hardest. Ensuring that a complex payment ecosystem works reliably would be a significant achievement, not dissimilar to running a bank, in fact. This goes beyond managing the transactions: you’ve got to be compliant with all the different regulations across the world, which is a mammoth task in itself.

If Uber wants to truly own the customer journey, then it will need to conquer a new sector: financial services (FS). Of course, it’s not alone in this race for sector convergence. The lines are blurring all the time between tech companies, car brands, retail, banks, telecoms, gaming – you name it.

The meter is running

Uber already has a fast-growing engineering division in Bangalore, India, that has started to architect a more seamless and convenient payment platform for operations teams and drivers. Admittedly, transactions in Asian markets are predominately debit and cash, rather than credit card. However, Bangalore will likely provide some key learnings for rolling out a global payment gateway that will could manage card transactions in different foreign currencies.

The challenge for Uber is whether it’s pockets are deep enough to complete the shift. They will need to raise considerable development capital to complete a single payment platform. Compared with Apple, for example, who have made plain their ambition to become major FS players, Uber must grow their trust and cash base. Being a successful first mover in this space would help on both fronts. Of course, getting this wrong could provide severe reputational damage in the eyes of investors and customers alike.

What needs to be done?

One safer option might be to partner with an established mobile payment provider, such as PayPal or WePay. This might help Uber to consolidate their growth and bring them into the corporate mainstream. All the same, this seems unlikely, given Uber have always preferred to go it alone in pursuit of the biggest prize.

Don’t write them off. They remain a viable proposition for investors given the future prospects of the mobility market, which is predicted to grow to $9 trillion by 2030 . There is a pot of gold at the other end of the rainbow. It won’t be a smooth ride, but it can be done. The backdrop is massively complex. They’ll need a different operating model and require rigorous assurance of technical delivery. They’ll have to set new standards in how they design, build and take their platform to market. Investor confidence is vital, so they’ll need a business plan that prioritises control over expenditure to ensure a return for every dollar.

Get this right, and Uber could remain independent in an incredibly competitive and converging environment. Get this right first, and Uber would be best placed to harvest the riches of tomorrow, with its connected cars, autonomous taxis and driverless deliveries. World domination is still on the cards.

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