American Express (Amex) and Uber have formed a partnership that could expose the private taxi service to Amex’s business customers, while simultaneously letting credit card customers burn their points on trips around town.
The two companies integrated American Express’ Membership Rewards Program into Uber’s iOS app, so that U.S. card members enrolled in the rewards program can use their points to pay for rides from within the Uber app. Users can also choose to earn twice the points by paying for the ride with the Amex card. In either case, riders receive an on-screen ride summary and email receipt from Uber detailing the rewards earned or burned.
For Amex’s part, the partnership was a simple case of math, according to Dave Wolf, vice president of global product and business development. “Our card members have spent hundreds of millions of dollars with Uber and a larger percentage of Uber users are our card members. We over-index in terms of Uber usage,” he says.
But this deal was not an attempt by Amex to create a mobile commerce play, Wolf adds. “Our strategy behind partnering with Uber was not to make an impact in mobile payments per se but to deliver value to card members by going where they are already.”
Marketing for Amex Rewards is built into the partnership via the app: Every Uber app user will see a full-screen message that lets them get started down the Amex payment path with one tap. Unlike most credit card issuers, Amex has direct relationships with both card users and merchants, and it also handles the payments processing in the middle. Wolf says that when someone launches the app, Amex knows whether she’s a card holder, as well as whether she’s enrolled in the rewards program.
“This is the real estate money can’t buy,” Wolf crows. “It’s a really native, deep, authentic, and simple integration.”
Uber customers who are not American Express cardholders can click through from Uber to begin the application process. “We think Uber is going to be a valuable acquisition channel,” Wolf says.
The integration was handled by Amex’s internal engineering staff, who built a series of APIs that let the app tap into Amex data in real time, so that users can see available points, choose whether to use them, and see changes in points at the end of the trip.
Suzy Cox, senior vice president at Olson 1to1, says the partnership could give Uber more access to business users, because both iPhone and Amex see very heavy use by business travelers. She says, “Getting a bigger piece of the business traveler market would be a very good thing for Uber. Business travelers tend to be a bit more insulated from price sensitivity than the non-business traveler customer. After all, the costs don’t come out of their pockets but those of their employers or clients. Under this agreement Uber can be seen by Amex’s huge data base of customers and will likely gain a number of new customers in the process. That is a nice win for Uber in the short term.”
But in the longer term, Cox sees Amex as gaining more from the deal. In nearly all cases where a company is leveraging some other company’s currency and loyalty program branding, the company with the currency and branding gets the most out of the deal in the long term, she explains. That company owns the member database and all the information that goes into it, and the loyalty points drive still more loyalty.
Amex may also benefit from points breakage, according to Cox. Loyalty points accrued but not used by customers typically are booked as revenue by the issuing company.
Sheryl Kingstone, director of Yankee Group’s Mobile Leadership Strategies service, gives high marks to Uber for its mobile customer experience. While a lot of the luxury market hasn’t embraced mobile, when they do, it needs to be a luxurious, friction-free experience, she says. “This one is a strong mobile experience.”
This Amex deal could raise Uber’s Net Promoter Score, according to Kingstone. Yankee Group has found that 44 percent of consumers say that they’re more willing to recommend a company that has mobile rewards.