Cash flow needs of gig economy workers met during COVID-19 crisis
The challenge
As the coronavirus pandemic increased demand for food delivery, drivers required immediate payment. With millions in the US in lockdown, food delivery services like Grubhub are filling the void in restaurant habits, as well as helping to support local food and beverage businesses at a critical time. For the drivers who deliver for Grubhub, this means increased business and an opportunity to earn more money. But it isn’t always simple getting earnings paid into the bank accounts of gig-economy workers in an expedient manner.Eric Ferguson, Senior Vice President of logistics at Grubhub explains, “a constant request was being able to cash-out their earnings in real time.“The collaboration between Grubhub and J.P. Morgan makes it easier for drivers to cash-out their earnings when they need funds. The service, “Instant Cash Out,“utilises the real-time payments infrastructure set up by the banking industry.
The solution
This is a true end-to-end payments solution from onboarding to cash-out. Drivers are able to open a new Chase Total Checking Account or link their existing bank account directly from their mobile device, and cash-out whenever and however they choose. The underlying payments infrastructure utilises the latest in payments technology including APIs, Early Warning Services (EWS) and real-time payments.Grubhub drivers are able to connect their existing account or open a Chase bank account digitally in under five minutes using their mobile device. If using a Chase account, they are able to receive the money they’ve earned in moments with no Instant Cash Out fees. If using a non-Chase account, there is a small US$0.50 fee per transaction. For new Chase accounts, drivers get a US$200 bonus upon account opening.
Best practice and innovation
- Digital account opening – drivers can initiate an integrated Chase digital account opening flow that takes less than five minutes, directly from their mobile device.
- Real-time Payments (RTP) – the first new US payment system innovation in 40 years, RTP drastically simplifies processes from transaction initiation to reconciliation. It combines immediate funds availability, settlement finality, instant confirmation and integrated informational flows to facilitate payments made in seconds.
- Fully API-driven – the bank uses APIs to help streamline the account validation process and make it nearly seamless for Grubhub to manage real-time driver payment initiations and transactional reporting.
- Early Warning Services (EWS) – authenticates payer/payee account information prior to transaction processing to help reduce transactions costs, improve approval rates, identity potentially high-risk payments, increase speed of enrolment for recurring payments and help reduce administrative ACH returns, unauthorised ACH transactions and cheque and wire fraud.
- Intelligent routing logic that has the capability to programmatically route driver payments via RTP, Same-Day ACH, or ACH.
In the past, gig-economy workers had to wait until their weekly payday to receive their earnings. With this solution, many drivers have the option to use a combination of the Instant Cash Out and weekly payday functions, giving them flexibility and helping Grubhub increase driver satisfaction.
Key benefits
- Improved driver experience and immediate access to cash.
- EWS account validation has reduced ACH returns/inbound inquiries on missing payments.
- Enhanced driver onboarding experience.
- Improved driver retention.
Lee Vecchione
