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Uber Just Got Cheaper In The US And Canada And Its Drivers Are Pissed

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Uber just got cheaper in eighty cities in the US and Canada, and Uber drivers are pissed. “We’re reducing prices to heat up demand,” the company wrote in an e-mail to drivers for its Uber X and Uber XL services. Demand, many drivers point out, does not necessarily mean higher earnings for them, and they claim instead they’re subsidizing the new rates with paltry earnings.

Drivers claim that while Uber continues making the same rate as before the rate cut, their earnings are directly impacted; indeed, in some markets, they will be subsidizing the costs to chauffeur passengers. Since Uber actively prohibits drivers from collecting data in its driver agreement, there is not much insight available publicly into Uber driver data.
driveragreementOne Denver driver, in breach of his Uber contract, supplied me with his pre-rate cut driver data in spreadsheet form. His data demonstrated that, on 75% of rides, his net earnings were less than $5 and 15% of his driver fares net less than $1 after taxes and expenses. Denver is one of the higher paying markets for Uber drivers.

His data demonstrated that, on minimum fare rides, which account for 30% of total driver rides, Uber deducted nearly 50% of the total fare for itself. Before the recent rate cut, and after taxes and expenses, he earned between 55 cents and 90 cents per mile on minimum fares, which comprised 30% of his rides. Coming up with how much a driver earns per mile is difficult because Uber does not calculate miles driven towards a passenger.

Read More: Uber Drivers Don’t Want To Die On Cross-Border Trips Into Mexico

The 2015 IRS estimate for costs to operate a vehicle is 57.5 cents per mile. Drivers in multiple North American cities reported making less than this amount per mile after the new rate cuts, such as in Detroit where drivers earn 30 cents per mile.

When the tech giant launched its new cost structure, Uber marketed a new “guarantee” to drivers. In order to be eligible for the guarantee, drivers must accept two rides per hour (sometimes demand does not allow for this) and be online during pre-stipulated “peak” hours. Otherwise, the guarantee is voided. I spoke with one former Detroit Uber driver, where rates are among the lowest, who stopped driving after the new rates were announced.

“It’s a joke,” the driver, who wished to stay anonymous, said.

Can’t make any money now, and the guarantees are a joke too.

The driver notes that Uber rates were already less expensive than a taxi’s in his city. “Now this is a minimum wage job at best,” he noted.

Read More: Uber Drivers Are Planning The Biggest Uber Strike In History

YouTube personality Uber Man, whose city earns nearly twice as much as Detroit, released a video in which he quit in protest of the new Uber rates. He calls the rate cuts “drastic and widespread.” He cites that many drivers will now essentially be paying to drive their passengers around, such as in Detroit. Drivers claim that Uber will be making the same exact money as before.

“The ones that are still driving are the ones that have no clue what their actual expenses are,” Colorado Springs Uber driver Karac Kirby said, listing some of the expenses.

“I do need the money, but there is none to be made.”

In Houston, drivers are striking, and claim to have caused a false surge in the area due to too few drivers on the roads.

“When I started in 2014, it was roughly three cents a mile and sixty cents a minute [to drive] and now we’re at 87 cents a mile and 11 cents a minute,” one Houston area driver told a local news stations covering the strike.

In a survey conducted of 215 Uber drivers, 92.1% believe the new rates are “terrible.” 90.6% do not believe they can make a “livable wage” at the new rate. 48% do not know if they will continue driving for Uber, while 40.7% say they will not. The overall sentiments from those who left comments in the survey are disgust, anger and discouragement.

An Uber spokesperson stated to me via e-mail that the company foresaw a slowdown for January based on data from the company’s five-and-a-half years of operation. “Reducing prices for riders can keep drivers busier,” the company wrote in an e-mail to Hacked. The company confirmed they will keep a close eye on the seasonal price cuts to understand the results and will reverse them  “if we don’t see drivers do as well or better.”  

While drivers remember previous rate cuts becoming permanent, the company cites examples in the past where price cuts were temporary, such as in Charlotte where a 40% price cut became a 29% price cut, and “earnings for drivers grew by nearly 20%.” The company also noted that in two cities, including Seattle (where Lyft recently lowered rates but kept driver pay the same), they reversed price cuts because prices were clearly too low “and earnings have remained stable since.”

Uber drivers shared with me stories of past wage cuts which, while marketed as temporary, became permanent.

Featured image from Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 1 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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  1. Bitcoins and Gravy

    January 15, 2016 at 2:12 am

    Well what is coming is a DECENTRALIZED model that will effectively put Uber and Lyft out of business. It’s going to take a few years, but it’s coming and there’s no stopping it. These new decentralized business models will allow drivers to make 100% of the profits, set rates competitively and have safeguards built in that will NOT allow price fixing, monopolies or anti-trust violations.

    Uber, Lyft, Airbnb, VRBO . . . your days are numbered y’all! So go on and rape, rob and pillage indiscriminately while you can . . . you dirty, greedy bastards!!!

    • Brunoxxx

      January 16, 2016 at 12:49 pm

      Dufus independent single owner taxis have been around for many decades. Your iq seems to be in lock step with the decline in bitcoin cash value and is prone to speculation for upticks.

    • Brunoxxx

      January 16, 2016 at 12:50 pm

      Yeah god and heaven forbid someone smarter than you making a “killer app” and raking in the big bucks you’ll never see.

    • Dimitri Andre

      January 30, 2016 at 7:05 pm

      yea right lol!! combine openbazaar (https://openbazaar.org/) with coinbase.com or uphold.com to take care of volatility and problem solve

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Overstock.com Shares Spike 17% After Chinese Private Equity Firm Pledges $270 Million for tZERO

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Shares of Overstock.com (OSTK) surged in after-hour trading Thursday after a major Chinese equity firm agreed to invest in tZERO, the blockchain subsidiary vying to reshape the investment world through a SEC-regulated alternative trading system (ATS).

GSR Capital to Invest Heavily in tZERO

CNBC confirmed on Thursday that Hong Kong-based GSR Capital will invest up to $270 million in tZero. The investment is based on a valuation of $1.5 billion, giving GSR an 18% stake in the new blockchain startup. GSR will also buy $30 million worth of tZERO security tokens.

“We are honored to have GSR Capital as a strategic investor,” said tZERO CEO Saum Noursalehi in a statement, as quoted by CNBC. “The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

The announcement came less than six weeks after GSR Capital signed a letter of intent with Overstock to purchase $160 million worth of security tokens.

Launched in December, tZERO’s initial coin offering (ICO) has raised $134 million to finance its ATS infrastructure, which will provide a regulated venue for securities trading. The company plans to build similar systems around the world.

Despite a highly successful crowdraise, documents submitted to the SEC earlier this year revealed a target of $250 million. Independent valuations had placed tZERO’s ICO anywhere between $200 million and $500 million.

Overstock.com Spikes

Overstock.com’s share price was up by as much as 21% after-hours. It would eventually settle at $45.40 for a gain of 17.6%.

As the following chart illustrates, the OSTK price rose 4.5% in regular trading on Thursday to settle at $38.60.

Despite the gain, OSTK has been a dismal performer this year. Share prices are down 40% year-to-date, vastly under-performing the Nasdaq Composite Index, which has returned more than 14%.  What’s more, the stock is trading at less than half of its 52-week high.

Overstock’s share price has been rocked by disappointing quarterly results and the cancellation of a proposed public stock offering. Last March, the company offered four million shares of common stocks before abruptly cancelling those plans. Noursalehi said the decision to pull the offering was due to “market volatility and price.” To be sure, OSTK had declined 20% following the initial announcement to issue common stock.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 544 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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A Closer Look at Boerse Stuttgart’s New Cryptocurrency Platform

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The Boerse Stuttgart group has is expanding upon past product launches to create a complete holistic ecosystem for digital assets, including cryptocurrencies. This comes on the heel of them launching the “Bison” app, which allowed users to trade cryptocurrencies with zero fees, similar in functionality to that offered by Robinhood.

The difference between Bison and Robinhood, however, is that the Boerse Stuttgart group is the second largest derivatives exchange in Germany. Another unique feature of the Bison app was its “crypto radar” feature.

This functions as a social media tool that aggregates more than 250k tweets and analyzes them to determine the “mood” of cryptocurrency investors.

Having an existing (and profitable) large financial firm expanding their brand to cryptocurrencies in any capacity reflects a market that is increasingly accepting the reality of institutional capital flowing into crypto markets.

The new ecosystem is composed of three distinct pillars. Bison represents the first of these pillars. The second is a branded platform for initial coin offerings to sell tokens. The third is a safe custody solution for digital assets.

This ecosystem, in turn, falls within Boerse Stuttgart’s so called “digitization” strategy and should serve as a bellwether of changes to come in financial markets. After all, as an established market player, Boerse Stuttgart Group has extensive knowledge in the fields of technology, regulation, and trading models respectively.

According to their own CEO Alexander Höptner, “On this basis, we can offer central services along the value chain for digital assets, all under one roof. Investors and market participants know that Boerse Stuttgart Group stands for quality, transparency, and reliability. As a Germany-based provider, we want to transpose this standard into the digital world. We will help to promote acceptance of digital assets.”

The key to their ambitions focuses on solving two major problems. The first is that KYC procedures tend to be overly complex for average investors, as well as time-consuming. The Boerse Stuttgart group’s own KYC solution allows traders to pass KYC and start trading within minutes, as opposed to more typical solutions that take a few days.

The second issue they are tackling the liquidity and accessibility of ICO tokens post-sale. They solve this by allowing tokens launched through their platform to be traded within their broader ecosystem using Bison.

According again to the CEO, “At the trading venue tokens issued via our ICO platform can be traded on the secondary market. This is an important success factor for ICOs. At the same time, we are responding to demand from both retail and institutional investors for a regulated and reliable environment for trading with cryptocurrencies. Furthermore, established cryptocurrencies like Bitcoin or Ethereum will also be traded.”

This approach will likely serve to establish the Boerse Stuttgart group a prime recipient of crypto-intrigued institutional capital. After all, the early bird gets the worm. A key component of this future success also rests on how well they partner with authorities.

This exact point was also emphasized recently by the CEO, who said, “In designing the strategic projects we closely cooperate with all competent boards and committees, and especially with the supervisory authorities.”

While it remains to be seen whether retail investors make use of this ecosystem, it seems reasonable to assume that larger investors will flock to a simple crypto-specific ecosystem backed by an old guard stalwart of finance.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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MasterCard Could Be Your Best Friend

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Since just after the financial crisis, I have been searching for a way to beat MasterCard and Visa at their own game. These two brands dominate the business of processing debit and credit card transactions.  I have always considered this duopoly as the enemy of mankind, but could turn out to be a hasty judgement.

MasterCard and Visa don’t actually process transactions as much as they offer an electronic network and charge fees for the use of their name.  They collect about 0.11% per card swipe which ain’t much until you consider they are running more than 150,000 transactions per minute through their network.  Pretty nice business to be in. All together, the two will generate about $30 billion this year.

The problem with both of these guys is that it is impossible to get around them.  If you buy something anywhere in the world with a debit or credit card, it is almost guaranteed to run on either the Visa or MasterCard network.  In which case, in addition to the 0.11% taken out for the network, the store that accepts your purchase pays anywhere from 3% to often as much as 5% in total for processing fees.  And if you travel abroad and charge something, well forget about it. Everywhere along the network are intermediaries taking their nick of your wallet.

When foreign currency transaction fees are taken into account, that is where more intermediaries are included.  That is where the costs add much higher and that is often where the consumer is hurt most.

Fighting Back

The whole idea behind blockchain technology is to make transactions of all types fast with little or no dependency on intermediaries.  All this makes MasterCard and Visa the enemy of cryptocurrency developers. But neither of these brands are sitting still applying for patents on blockchain based payments methods.

The natural reaction is to sell to sell your crypto and find some easier way to earn a decent return.  We disagree: we think there is crypto to be made from MasterCards strategy. Here is why you should be encouraged.

ome time back, MasterCard applied for a patent on blockchain technology that created a link between crypto and fiat currencies. MasterCard is not alone, as there are any number of crypto projects with the same idea.  Recently we looked at TenX and there are others.

Using TenX for comparison, MasterCard’s recently awarded patent offers to convert crypto to fiat using the existing MasterCard network.  TenX and many others plan either create their own high speed mainnet or use the Ethereum platform.

In head to head competition, this gives MasterCard a sizable advantage since MC is pretty much accepted by merchants everywhere.  As much as I hate the duopoly represented my MC and Visa, right now they could turn out to be the best thing to happen for one simple reason.  They will unquestionable accelerate mass acceptance of crypto.

Their existing network and transaction speed, immediately solves the lingering Bitcoin/Ethereum issue of scalability.  In addition as observers have pointed out, both MC and Visa have had systems in place to identify fraudulent transactions.

Having said all of this, is MasterCard going to kill all other crypto payment wanabys like TenX and others? Before concluding the answer is yes, consider this.  In their recently released quarterly review to shareholders, MasterCard reported net income of $2.33 billion on revenue of $5.24 billion. That is a whopping profit margin of 44.5%!  This towers over extraordinarily profitable companies like Apple at 20.3% or the average US corporation at less than 10%.

When MasterCard’s blockchain system goes into use, it will plump up those already MC margins. So, as a crypto investor, you have to ask yourself, do you actually think that MC will pass on those savings or wallow in the cost savings?  The answer is pretty obvious.

MasterCard Could Be The Best News

Crypto naysayers are the first to deny that Bitcoin and others are a legitimate medium of exchange.  This is based largely on the limited number of mainstream merchants that are in the crypto loop. MasterCard could help take crypto mainstream and that would be a good thing for major names like Bitcoin, Bitcoin Cash and Ether.  And with the payments processing business dealing in over $50 trillion in transactions annually, there will be room for startups offering high speed scalability at lower cost. It will not happen this year but it will happen.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 96 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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