Ride-hailing companies like Grab and Gojek are always releasing different types of benefits in their efforts to better support drivers and keep them happy.
One of the new methods Grab has employed is its Upfront Cash Programme, which allows selected food delivery partners and drivers to take an advance on their pay, and return it in weekly instalments.
Our Upfront Cash Programme rewards an eligible group of driver-partners with early payment of future incentives, so they can take care of their needs easily.Grab website
Grab says that the initiative was created to give riders and drivers “better cash flow”.
For example, they could use the cash to settle expenses like loan payments or big ticket purchases immediately.
After a cash advance amount is granted, the driver can then choose their repayment duration, up to 26 weeks.
The app will automatically make a fixed deduction from the driver’s earned incentives every Monday until the amount is fully paid back.
Grab doesn’t consider this service a loan, as it works similarly to companies that offer salary advances to employees, and it comes with no interest.
However, when drivers apply to use the programme, they will be charged a one-time administrative fee derived from a percentage of the amount they take out.
According to a report by The Straits Times, Grab drivers who were offered the programme have shared screenshots among themselves and gathered that the advance offered can go up to about $8,900, while admin fees go up to 8%.
Using these figures as an example, Grab would be earning $712 (8% of $8,900) in admin fees charged to the driver.
How Could This Go Wrong?
Looking at the admin fees, this may be one of the reasons that the Ministry of Law and other Singapore authorities are concerned about the programme.
Grab has not revealed much about the mechanics they use to determine what percentage to charge each Upfront Cash applicant, and it is possible that they may even change their fee structure in the future.
Another concern raised was the risk that some riders or drivers who apply for the advance may spend it unwisely and end up struggling to repay the amount.
Grab has some methods in place to prevent this, starting from the fact that only a small group of drivers and food delivery partners qualify for the programme based on their “good historical earnings and overall pattern”.
Each rider or driver who qualifies will be shown a maximum amount they can take out, and they will not be allowed to appeal for anything higher.
The maximum offer will also be continually updated according to the changes in the driver’s latest earning patterns.
Riders and drivers who were not invited to the programme cannot request to join.
In the event that an applicant has insufficient funds in their in-app Cash Wallet to repay their advance, Grab’s advice is that they should “continue accepting jobs” on the app until they are able to clear the repayment.
Alternatively, they can choose to top up their Credit Wallet so that Grab can make deductions from there instead.
Here is where Government Parliamentary Committee of Manpower Deputy Chairman Zainal Sapari raised another concern:
“I hope Grab does not use this scheme as a way to retain or bind their workers to continue working as their rider or driver,” he told ST.
Indeed, Grab’s FAQs state that drivers will not be able to terminate their account if they have outstanding payments.
However, Grab has clarified with Vulcan Post that drivers are not limited to making repayment through deductions from their in-app wallet.
They may also choose to complete repayment via bank transfer or other methods instead.
This means that if they have access to other funds or other forms of income, they will not be ‘locked in’ to drive for Grab just to repay the advance.
Featured Image Credit: Fortune