The business model of on-demand service apps such as Postmates or Instacart rely on the ability for their couriers to fulfill orders as intended. In order to carry out orders, on-demand platforms must provide their drivers with a form of funds, in order to complete the transaction on behalf of their customers. However, providing cash or loaded payment cards money to gig workers creates a high level of risk for fraud and requires trust to be placed on drivers.
What if there was a safer way for on-demand apps to provide their couriers with the exact amount of funds they need at the time of purchase?
This article explores Point-of-Sale Funding Cards and their ability to solve the fraud and payment issues that on-demand apps face within their business model.
What are Point-of-Sale Funding Cards?
Point-of-Sale Funding Cards allow on-demand apps to instantly disburse funds onto a payment card held by the courier at the time of a transaction. This is done by providing couriers with a $0.00 dollar balance card that requires authorization from the on-demand application to make a purchase. Meaning, funds are only loaded onto the card after a driver attempts to fulfill a transaction at a store and the on-demand app approves of the purchase.
Point-of-Sale Funding Cards allow on-demand apps to provide their drivers with the funds necessary to carry out orders for their customers, without taking on any of the risks involved with carrying cash. This provides on-demand applications full control over authorization of orders.
“Point-of-Sale Funding Cards allow on-demand apps to instantly disburse funds onto a payment card held by the courier at the time of a transaction.“
How Do Point-of-Sale Funding Cards Work?
To illustrate how point-of-sale funding cards function, we will use Instacart, an on-demand grocery delivery application, as an example. In their order facilitation process, a consumer would first log onto the Instacart app and order groceries. Let’s say this user’s order totals to $53.26.
A courier would receive the order request, travel to the grocery store to gather the customer’s requested goods, and then would head to the checkout counter. Once at the point-of-sale, the driver would see a total of $52.26 on the payment terminal. The driver would then insert their $0-balance card as they would a regular debit or credit card.
In the few seconds that the transaction takes place, a payment authorization request is sent from the terminal to the card processor, who relays that request to Instacart’s application using APIs. The transaction’s location, order information and pricing data is verified by Instacart’s system to either approve or deny the transaction request. If the transaction is approved, Instacart would be able to instantly push exactly $53.26 (the order total) onto the card to complete the transaction. The order could then be fulfilled, the goods would be paid for, and the courier could proceed to deliver the customer’s groceries.
“The transaction will go through a series of criteria such as location, order information and dynamic pricing data to either approve or deny the transaction request.“
Why Point-of-Sale Funding Cards Are Integral to the On-Demand Service Business Model
$0 Balance Cards Mitigate Fraud
By funding the payment card at the time of purchase, on-demand platforms are able to greatly decrease the odds of fraudulent transactions or misused funds.
Improved Cash Flow Management
Since the exact amount of required funds are released in real-time, businesses are able to easily track where funds are being spent and when. This eliminates the need to estimate an amount of pre-allocated funds to put onto a courier’s card.
Point-of-Sale Funding technology analyzes each transaction request in real-time, giving your business complete control over the entire payment process. Using a Payments-as-a-Service provider’s open API, you can set up customized business rules on your on-demand application, to automate decision making and meet specific user order processes.
Scale Your Platform
With the use of Point-of-Sale Funding cards, your on-demand platform can easily scale the amount of drivers, as cards can be issued in the courier on-boarding process. This is the result of a fully trustworthy and payment solution that mitigates risk on a large scale and gives your business the confidence to hand off responsibility externally.
“Using a Payments-as-a-Service provider’s open API, you can set up customized business rules to automate the decision making process to meet specific business standards.“
Interested in Setting up Point-of-Sale Funding Cards for Your Gig Workers?
Berkeley is the Payments-as-a-Service provider that can help your on-demand app scale your businesses and regain control over driver finances today.