Grab trims user rewards, tightens redemption plan

Fewer points earned per transaction from March 2, more needed to get some rewards

Grab's change in its reward programme comes even as media reports noted last month that the company was still finding its way to profitability. The Information, a digital information company, noted in a report that Grab had, at the end of 2018, been
Grab's change in its reward programme comes even as media reports noted last month that the company was still finding its way to profitability. The Information, a digital information company, noted in a report that Grab had, at the end of 2018, been internally projecting a 2019 annual net loss of about US$1.5 billion (S$2 billion).ST PHOTO: LIM YAOHUI

Technology company Grab is making it harder for its users to earn and use reward points, in what is being seen as a cost-cutting move.

Grab is set to reduce the number of points users can earn on a transaction while raising the number of points they need to redeem certain rewards from March 2, according to its website yesterday.

The firm's most frequent platinum users will earn four points for every $1 spent across all products with the change, down from the 10 points for every $1 when they use GrabPay in stores, and six points for every $1 spent on ride hailing and food delivery services.

Its least frequent, or member, users will earn two points per $1 spent, down from the five points per $1 for in-store GrabPay transactions and three points per $1 for GrabFood and ride hailing.

Grab will also increase the number of points needed to redeem certain rewards.

A $5 voucher for a Grab ride will require 2,500 points across all user tiers. Users can now redeem it for between 1,900 and 2,200 points, depending on their tier.

A Grab spokesman said: "While the points earned on each dollar spent will be fewer, our customers will have more places to earn and spend their reward points."

The spokesman was referring to how users can accrue more points with the launch last month of its GrabPay Card initiative.

This GrabPay Card can be used at all merchants which accept Mastercard, while also giving users GrabRewards points.

"Customers can also look forward to more ways of earning points and rewards," the spokesman added, listing examples such as games, flash sales and campaigns.

The change in rewards comes even as media reports noted last month that Grab was still finding its way to profitability.

 
 

The Information, a digital information company, noted in a report that Grab had, at the end of 2018, been internally projecting a 2019 annual net loss of about US$1.5 billion (S$2 billion).

Also, news outlet Bloomberg had reported that accumulated losses from the entity GrabTaxi, which likely does not fully reflect the business, stood at $228.9 million in 2018, according to regulatory filings.

Mr Reuben Lai, senior managing director at Grab Financial Group, told The Business Times that Grab's earnings before interest, tax, depreciation and amortisation are positive in mature markets and for some of its businesses, but he did not give more information.

Grab also would not confirm if its Singapore business is profitable, the same report noted.

Associate Professor Lawrence Loh of the National University of Singapore Business School said that bigger start-ups like Grab are realising that "they cannot burn cash indefinitely".

"Given Grab's challenging profitability situation, it has to progressively rationalise its costs, particularly those of a more discretionary nature like consumer rewards," added Prof Loh, who is the director of the Centre of Governance, Institutions and Organisations.

Prof Loh also noted that Grab's main rival in the ride-hailing business - Gojek - is not competing in the same rewards space.

"Grab has to conserve and channel its financial resources to new strategic initiatives, even digital banking," he said, referring to Grab's decision to apply for a digital full bank licence with Singtel.

A digital full bank licence will give chosen entities access to both retail and corporate customers and enable them to take deposits from retail customers.

Grab and Singtel will know if their application is successful by the middle of this year.

A version of this article appeared in the print edition of The Straits Times on January 22, 2020, with the headline 'Grab trims user rewards, tightens redemption plan'. Subscribe