Uber may be known as a ride-share play, but it’s much more than that. Dara Khosrowshahi, Uber CEO, likens the company more to Amazon.com than ride-share rival Lyft. One of the areas in which it goes head-to-head with Jeff Bezos’ e-commerce giant is food delivery. In fact, restaurant food delivery is hotter than ever and payments companies are vying for their share of the market.
Food delivery apps provide an opportunity for payment providers because brands such as Uber Eats, GrubHub, and others are not limited to the payment methods accepted by restaurants.
Here’s how it works: Customers download the mobile app of Uber Eats or another food-delivery provider. (Incidentally, Uber Eats is a separate app from the one you use to catch a ride but there’s no need for ride-share customers to download the second app.)
Next, customers view the menus of the numerous restaurants that are supported on the app. Orders and payments are then completed digitally including any fees and tips via stored card details or a payment provider such as PayPal, Venmo, Apple Pay, or Google Pay, for instance. Loyalty points and rewards can also be applied toward payments.
Source: PaymentsSource/Verto Watch September 2018
One sign that payments companies are salivating at the opportunity in food delivery is PayPal’s reported $500 million investment into Uber. While the investment is designed to solidify PayPal’s role as Uber’s top payment provider for ride-share, it’s also timed to coincide with Uber’s increased focus on food delivery. Uber CEO Dara Khosrowshahi stated in a public filing:
“We are still barely scratching the surface when it comes to huge industries like food and logistics, and how the future of urban mobility will reshape cities for the better.”
Uber Eats has recently expanded to accept Apple Pay as a payment option. While you might already pay for Uber’s ride share with Apple Pay, the Uber Eats app didn’t offer Apple Pay until recently. Uber Eats is in the process of rolling out Apple Pay in numerous countries across North America and Europe in addition to the UAE and New Zealand. It gives customers the convenience of paying via FaceID or TouchID within the app rather than having to manually fill out payment details.
But Uber Eats can’t be found everywhere, particularly in Eastern European countries. That’s where Bolt comes in to fill the void. Bolt (previously called Taxify) is in the process of introducing food delivery to the Estonian and Finnish markets, as well as South Africa. Like Uber, Bolt is looking to capitalize on its ride-share network using the payment technology already developed. Other food-delivery companies in the region include Wolt and Delivery Hero.
Payments company Square, meanwhile, has partnered with Postmates for on-demand delivery. This gives merchants and restaurants the ability to offer “on-demand delivery to any transaction with just the touch of a button,” according to Food on Demand.
Source: PaymentsSource and Cowen Inc.
Food Delivery and Cryptocurrency
One way that payment providers are expanding in the food-delivery arena is with cryptocurrencies. A famous example is a transaction involving bitcoin, the first and biggest cryptocurrency. In 2010, a U.S.-based programmer directed 10,000 bitcoins to purchase two Papa John’s pizzas. Back then the bitcoins were worth approximately USD 30. Incidentally, with the bitcoin price currently hovering at USD 7,000, the 10,000 bitcoins would be worth USD 70 million today.
Since then, merchants have expanded to accept other cryptocurrencies beyond just bitcoin. Ryan Taylor is the CEO of the Dash project, which is behind the 13th biggest cryptocurrency. Taylor tweeted that he purchased dinner via UberEats using Dash and even received a 6% #DashBack reward.
Crypto, however, remains a nascent market and there are still some kinks to work out when it comes to everyday purchases such as food delivery.
In March 2019, Erik Voorhees, who is at the helm of cryptocurrency exchange ShapeShift, tweeted about a failed attempt to purchase pizzas for the office and pay with bitcoin. He said they attempted to order 18 pizzas using bitcoin’s Lightning Network, which is technology designed to accelerate bitcoin payments and also support everyday purchases. Unfortunately, the system could only handle a transaction for two pizzas at the time.
Any way you slice it, the food delivery market is only expected to grow over the next several years, with estimates for this niche to be worth more than $75 billion by 2020. Considering it was worth less than $50 billion just two years ago, customers can expect that their options for paying for food delivery will only increase.