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Uber tests cash payments in India

12 May 2015  |  6208 views  |  3 India, tuk-tuks

Uber, the taxi-hailing app heavily associated with mobile-based electronic payments, is trialling cash payments in the Indian city of Hyderabad.

In a blog, the fast-growing darling of the sharing economy says that users in Hyderabad will soon see a 'Cash' option when they open the Uber app. If they click it, they pay the driver with notes at the end of their ride.

Hyderabad becomes the first of Uber's 300 cities around the world to get the option and was chosen "because it provides us with the right environment to test a new payment option amongst a sizeable and sophisticated rider and driver community". Other Indian cities are expected to follow.

The decision by a firm at the technological cutting edge to embrace an old-fashioned payment method is a recognition by Uber that it has to adapt its model in developing markets. According to Reuters, India has just 20 million credit cards, a fact that has seen Uber badly trail local rival Ola, which accepts cash.

Cash still dominates in the country, although earlier this year authorities set out plans for a unified electronic payments system and set of APIs designed to wean the country off of paper money and onto electronic transactions tapping smartphone and biometric technology.

Comments: (3)

A Finextra member
A Finextra member | 13 May, 2015, 06:26

Tax ID is mandatory in India to get a credit card and only 3% of the population files income tax return in India.

Therefore, companies need to embrace payment methods which are not impacted by the tax patterns.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 13 May, 2015, 16:07

UBER accepts both credit and debit cards. Virtually everyone in India with a bank account has a debit card. While I don't have the exact numbers, I can bet that an overwhelming majority of Uber's middle class target audience has one or more debit and credit cards. So, Uber’s decision has nothing to do with card penetration level in India.

Now that I’ve hopefully swept away the customary patronizing arguments about how India does not have enough card users, here's why I don't use Uber despite having a credit card since 1988 and despite using its competitors Ola, Meru et al for over 100 trips. And, extrapolating from there, my take on why Uber was driven (no pun intended!) to this decision.

India's central bank cum banking regulator RBI keeps tacking on more and more security measures in a move to assure consumers that cashless electronic payments are fraud proof. For example, India is the only country in the world that uses Chip + PIN + Signature! Fraud levels are admittedly low in India. But, so are transaction levels. As I've argued for many years, the greater security measures have increased friction sharply and driven people off electronic payments. So much so that a person like me who has been using credit cards offline since 1988 and online since 1998 - yes, I'm that old! - finds it very painful to use them of late and has moved to cash and COD for offline and online purchases respectively. So, muted card use is because of heavy friction and has nothing to do with card penetration level in India.

Late, but smart, move by UBER to accept cash. I might finally give it a try - this Uber + PayTM thing never worked for me.

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Hitesh Thakkar
Hitesh Thakkar - FIS Payments Software and Services India - India | 14 September, 2015, 12:06

There is more than just that the India is still cash based society in case of Uber another reason can be Peer pressure.

For one of my client (bank exploring tie up for value added services for drivers) we had opportunity to closely look at business model of Meru, OLA and 'Taxi for Sure'. On personal ground, I have been using Ola, Taxi For sure more than Uber because, of great cash back and coupons that offer to frequent riders than Uber.

I feel these players gives stiff competition to Uber. OLA specifically support Auto Drivers ( Three wheel Automobiles -Bajaj Auto) and have many commuters like me using it. OLA drivers accept (few even prefer Cash - reason is obvious as they get instant money where as Ola funds their ICICI account T+2 days sometimes.  :)) of course they never refuse online payment both cab and auto drivers and promote its usage to passenger.

Uber had to succumb as recently more drivers moved to Ola due to rates and funding issues and recent tie up of OLA and TaxiForSure.

 

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