In the Uber model (and many other gig economy platform models) the platform agencies are the ones who collect the cash first and then distribute it back (less fees) to drivers on a weekly basis.
While many might deem this an innocuous difference, it isn’t really. The platforms gain a significant cash-flow advantage over the drivers as a consequence. The arrangement also entirely flips the power and credit risk distributions on their head. It is not the drivers, under the model, who are purchasing services from third-party dispatch platforms, it is by all logical means the platforms who are purchasing services from drivers.
It is this structural difference which ensures the platforms have the power to intimidate drivers if and when they want to (by threatening to hold back earnings or by unilaterally imposing bigger fees with little to no notice). It happens also to be a framework which allows car providers/financiers to strike deals with drivers where they have senior claims over driver cashflows from Uber than drivers do.
The credit factor
From a credit perspective you’re turning a cashflow arrangement which benefits the driver first, then the lender and then the dispatcher, to one which benefits the dispatcher first, the lender (potentially) second and the driver absolutely last. Contrast that with the cash flow prioritisation model in a traditional corporate structure, where — in the event of an insolvency — salaries must be paid before other obligations.
To wit, what would happen to the Uber model (and all its many derivatives) if workers demanded to be paid directly rather than on a weekly basis, or more pertinently still, on a gross rather than fee-subtracted basis? In the modern digital payments era, it’s hard to imagine why this cannot be arranged.
And yet chances are, this would never happen precisely because the cash-flow and credit advantage provided to the platforms via the deferred payment structure is keyto its attraction and sustainability.
To that end, the RSA’s latest report on the gig economy is the first we’ve seen that hints of the employer/employee power shifts connected to the cash management structure.