The card is issued by Barclays and is targeted at millennials. It gives cardholders 4 percent cash back on restaurant purchases, 3 percent on travel, 2 percent on ride shares and other internet purchases, and 1 percent on everything else. There are no annual or foreign transaction fees, and there’s a $100 signing bonus.
That’s a lot of cash back!
I’m no expert
on credit card promotions, but one thing is clear to anyone who can count: The rewards Uber is offering for restaurants and travel are higher than the amount it can make back through its share of credit card transaction fees (interchange fees), which are at most 2.4 percent (plus a $0.10 flat rate). Uber is no stranger to money-losing business initiatives, but it doesn’t give away cash for no reason.
Maybe the payoff will come in the form of brand loyalty: cardholders might be more likely to ride with Uber than with competitors like Lyft. But if that were the strategy, it’s strangely executed – you’d have to wonder why the card’s cash-back benefits are the same for taking Uber as for any other ride-share service.
So consider the value of something else Uber could get from the card: Data.
That means Uber has the right to use cardholders’ transaction histories to refine its products and pricing.
An Uber representative assured me that the company isn’t doing anything like that at the moment, and isn’t even receiving individual-level data from Barclays. But the company has plenty of incentive to exercise its right to do so in the future.
With individual-level transaction data, Uber could, for example, use cardholders’ dining-purchase histories to recommend restaurants on UberEats. Even more valuable would be access to information about cardholders’ use of competing ride-share platforms and other modes of transport.
Right now, if you open the Uber app and price a ride but don’t call it, Uber has no idea what happened. Perhaps you rode with a competitor, but perhaps you just decided to wait for prices to fall, or took a bus. If you’re using the Uber card, by contrast, Uber could learn whether you took Lyft instead – and would know how much you paid.
Theoretically, the company might eventually learn enough to identify customers who habitually pay more for rides, and just charge them a little extra without telling them what’s going on. Such an approach could backfire badly if people found out – but Uber has shown that it’s willing to take provocative business risks.
Some people might consider exposure of transaction information to be an invasion of their privacy – but of course nobody’s forcing them to sign up for the card. And we know that lots of consumers are perfectly willing to exchange data for convenience and a little bit of cash; they might not notice where Uber could be heading and might not care if they do.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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Jonathan Landman at email@example.com