In the first major new product partnership under Uber’s new CEO Dara Khosrowshahi, the company on Wednesday entered the lucrative credit card market.
Uber announced a rewards earning, no-fees credit card, backed by Barclays bank. It’s a way for the company to double down on one of its more successful businesses beyond ride sharing and black-car hailing: UberEats.
UberEats is Uber’s food delivery service (aka its GrubHub killer), on track to book $US3 billion in revenue this year, reports The Financial Times and responsible for up to 10% of the company’s revenue.
Naturally the Uber credit card will allow you to charge Uber rides to it, giving you 2% cash back on them (the same deal it offers on all online shopping including video and music streaming services).
But it will give you 4% cashback on restaurants, takeout, and bars, including UberEats and 1% cashback on typical purchases. It also offers 3% back on airfare, hotels, and vacation home rentals and other perks like mobile phone insurance of up to $US600 covering damage and theft, if the card is used to pay the monthly mobile phone bill.
If you don’t pay your monthly bill on time, expect to be on the hook for some hefty interest. The annual percentage range is from 15.99% to 24.74%, depending on things like your credit history.
And that makes this an extremely lucrative market. Americans currently owe over $US1 trillion on credit cards, according to Federal Reserve data released in August.
Uber isn’t the only tech company to offer a credit card. For instance Apple offers one with similar interest rates, also backed by Barclays.
This deal had been in the works before Khosrowshahi took over as CEO in September, someone close to the company tells us, but it is still the first significant new partnership product under his new reign.
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