Grab drivers think upfront payment program a ‘trap’
Grab offers an upfront payment program that allows select drivers and food delivery partners to select take a cash advance on their future income, and repay it in weekly installments.
Here’s how it works at a glance:
- Program drivers / food delivery partners will be offered a maximum amount they can request for. This amount is decided based on their income and constantly updated based on their latest income.
- When requesting an advance, applicants can choose a period of up to 26 weeks to split the repayment.
- Grab will automatically deduct funds from the driver / food delivery partner’s in-app wallet once a week, until the amount is fully paid.
- There is no interest to pay.
- However, drivers / food delivery partners must pay a one-time administration fees when they apply. The fees are derived from a varying percentage of the amount of the advance they have chosen to take. Grab says it varies between 5% and 10%.
Authorities Worried About Drivers Who Cannot Pay
Grab only offered this program to “a small group” of drivers and food delivery partners with still “good historical incomes”, to avoid the risk that people will have trouble repaying after joining the program. .
In any case, the Singaporean authorities have expressed their concerns regarding this regime.
The Justice Department said it is “currently seeking further information” on the program and is working with relevant agencies to “verify applicable legislation”.
The deputy chairman of the parliamentary government manpower commission, Zainal Sapari, expressed concern that some drivers could find themselves in financial distress if they are unable to repay.
If that happens, he thinks it might affect their freedom of choice to find another job.
I hope Grab is not using this program as a way to restrain or coerce their workers to continue working as a biker or driver.
Zainal Sapari, Vice-President, Government Parliamentary Commission on Manpower
This line in particular has resonated with some drivers, especially those who have used the Upfront Cash program and encountered difficulties afterwards.
Drivers affected by reduced incentives: is it a trap?
Zainal Sapari shared an email he received from a Grab driver on his Facebook page November 27, 2019.
According to the post, the driver said he took a cash advance from Grab, which he described as a loan, after being offered three opportunities to participate in the program.
After taking a lead, the driver said he was then informed that Grab would be “Lower and replace certain incentives”, which reduces his income “by about 30%”.
As a result, he has had to drive seven days a week “over the last few weeks” in order to pay off Grab and earn some income to pocket.
“I am sure that the drivers who took out the loan [made the decision knowing they could pay it back] based on what they were earning before the incentives were [changed]”, wrote the driver.
He sees this scheme as a strategy that allows Grab to lower its incentives without losing drivers, because they are “stuck” to continue driving to pay their reimbursement.
Beyond the problems with the Upfront Cash program, the driver also spoke of other difficulties such as getting unequal work priority and being “forced” to take jobs with bad rates. to avoid a temporary suspension of the application.
What do other Grab pilots have to say about this?
After finding out about this post, we reached out to a community of private drivers on Facebook to find out about their experiences.
A few of them shared similar feelings with the driver who wrote the email, pointing out that the decrease in incentives made it harder than expected to pay off while trying to make a living.
Drivers who agreed with this also shared the view that the upfront payment program works as a “trap” that allows Grab to tie up the conductors.
The other perspective: a good source of financial assistance
However, there are also some drivers who say they have used the cash advance without a problem.
A driver said he was behind on several refunds, but suffered no consequences or penalties.
He added that he found the program useful and “hassle free”.
Many pilots have also expressed their support for Grab.
Instead of seeing the program as damaging, they see it as a good option for drivers who are in urgent need of immediate funds, provided they fully understand the payment terms.
One of the points they raised is that drivers who use the program should not rely on incentives, as these are simply rewards offered on top of the base income and are always subject to change.
Some also refute the concern that using the program binds them to Grab, as they note that drivers are in fact free to find other sources of income if they wish. They can then transfer funds to their Grab wallet to repay the advance.
Drivers are not stuck with Grab
In response to the ongoing debate, a spokesperson for Grab told Vulcan Post that the purpose of the Upfront Cash program is “to help [their] partners in situations such as family emergencies, or when they have to pay for the education of children, or for [household purchases]”.
“Partners who are unable to earn and refund their incentives for any reason are encouraged to contact Grab as we have a dedicated team who can assist them on a case-by-case basis. This includes allowing partners to return their incentives by wire transfer and / or by means other than through the Grab app, ”they said.
Grab added that “a few hundred” of drivers / food delivery partners who have opted for the program “have decided to stop driving for the platform within the last month”, and have arranged to repay their advances through alternative methods.
Since inception, some 97% of the incentive amounts paid to partners under the Upfront Cash program have been repaid in a timely manner. Grab is monitoring the program closely and will continue to ensure that our partners can benefit from it.
Take the spokesperson
Put rules in place to keep it on track
Overall, the Upfront Cash program can be of benefit to grab drivers and food delivery partners for a number of reasons.
Its one-time administration fee is stated upfront, after which there are no interest, hidden fees, or late payment penalties.
Compared to typical interest rates for bank loans, which can range from around 5% to 25%, Grab’s administration fee (5 to 10%) is cheaper, making the program more accessible to people. having cash flow difficulties.
At the end of the day, if drivers can choose other forms of employment while they are paying their reimbursement, the program does not really impose any restrictions.
However, it may be interesting to note that there are some limitations to the program.
For example, Grab can only assess the eligibility of their drivers based on their historical income in the app. They wouldn’t have access to drivers’ credit histories to determine their creditworthiness, nor would they know if a driver has any other debt to pay off elsewhere.
Grab is also not currently regulated on how they set their administration fees or how they change incentive structures once drivers have taken an approved upfront amount based on their income. earlier.
If the Singapore authorities decide to put certain parameters in place to regulate how Grab performs this, it would help ensure that the program remains useful for drivers who need financial support.
Featured Image Credit: The Pride – Singapore Kindness Movement / PHV Riders and Drivers Singapore Facebook Group