Review of Grab's Upfront Cash Programme Offered to Delivery Riders
Ministry of LawSpeakers
Summary
This question concerns a review of Grab’s Upfront Cash Programme (UCP) for delivery partners, as raised by MP Ms Foo Mee Har regarding its administrative fees compared to moneylenders and banks. Minister for Law K Shanmugam responded that the Ministry is engaging Grab to study the programme, where partners receive advance incentive payments for a 5% to 10% fee with no further interest. He noted that while licensed moneylenders may charge a 10% upfront fee plus 4% monthly interest, direct comparisons with bank products are difficult due to differing terms and risk profiles. The Ministry of Law will continue to study the UCP before assessing if regulatory measures are necessary to ensure the reasonableness of the charges imposed on the service providers. Minister for Law K Shanmugam concluded by encouraging individuals to carefully assess their ability to meet requirements and financial commitments before participating in such upfront payment schemes.
Transcript
38 Ms Foo Mee Har asked the Minister for Law (a) whether the Ministry will review Grab's Upfront Cash Programme offered to their delivery riders to determine whether the administrative charges are reasonable; and (b) how do the charges compare to rates offered by moneylenders and banks for unsecured lending.
Mr K Shanmugam: Grab's Upfront Cash Programme has been brought to the attention of the Ministry of Law. We are engaging Grab to find out more about this programme. Let me provide a brief description of the UCP based on what we have gathered from Grab.
The UCP is a programme offered to selected Grab's third party service providers, which include GrabCar and GrabTaxi drivers and delivery partners. These service providers derive their income from two sources. First, they earn fees paid directly by users. Second, Grab pays out incentives when they complete certain requirements. For example, a delivery partner may earn an incentive upon completing a certain number of trips within a stipulated time period. Under the UCP, such a selected delivery partner can request to receive their incentive payments in advance, before completing the requirements. If Grab accedes to such requests, it charges the delivery partner an upfront administrative fee before disbursing the balance incentive payment.
The Member asked how the charges for Grab's UCP compares. As there are differences in the features, terms and conditions of various products, we would like to caution against making direct comparisons. Nevertheless, let me share briefly the rates offered by Grab. According to Grab, the administrative fee ranges from 5% to 10% of the advance incentive payments granted, and no further fees or interest charges are imposed. Under the regulatory framework for moneylending, licensed moneylenders are permitted to charge an upfront administrative fee of not more than 10% of the loan principal, as well as a nominal interest of up to 4% per month and other prescribed fees. Banks offer a wide range of credit products and charges vary, according to the tenor, risk and other features of the product concerned.
We will study further with Grab before assessing what measures need to be taken. We strongly encourage individuals to review the terms of the UCP carefully and assess their ability to complete the requirements and meet the financial commitments before participating in the programme.