Driven by cash payments, Uber vrooms ahead in taxi war

Taxi-hailing app Uber’s bet on cash payments is paying off: the company has seen its India market share rev up from a lowly 5 per cent in January 2015 to 50 per cent today, largely driven by its business model-busting cash payment facility.

The rollout of the cash option in May 2015 marked a departure from the San Francisco-based cab aggregator’s global model of accepting payments only via credit cards or mobile wallets. It marked a concession to the peculiarities of the Indian market, which has a low credit card penetration: of India’s 1.32 billion people, only an estimated 19.9 million hold credit cards.

But so well has the new model worked for Uber that it is now taking the cash option to over 70 countries worldwide.

An Uber spokesperson, while declining to disclose any numbers, said the introduction of the cash option has opened up the company’s rider base substantially, particularly in Tier II and Tier III cities, where e-payments meet with a higher level of inhibition. According to one source, in small towns, nearly all of Uber riders now pay cash. Even in cities, the cash option had helped the firm expand its customer base.

For Uber, the embrace of the cash option in India came in response to the need to compete with arch rival Ola Cabs, which had unveiled the cash payment option even earlier.

“Uber test-drove the cash option in India; the pilot was extremely successful and we have rolled out this option in 27 cities so far,” said an Uber spokeperson.

“Not just that, we are replicating the Indian initiative to several other parts of world, including LatAm, Africa and parts of Asia, which are primarily cash economies,” the spokesperson added.

On its internal blog, Uber recently said: “Growth in India is big for Uber, so much so that some of our product and engineering teams in San Francisco and Bangalore focus exclusively on it. Introducing cash payments for rides has fostered our growth in India and beyond.”

In addition to low credit card penetration, Uber was responding to other only-in-India challenges that inhibited digital payments: spotty internet connectivity, and the two-factor authentication, which slows down user experience.

The cash payment option is also benefiting Uber drivers: earlier, drivers were paid weekly, but now they get their fares instantly.

The company has streamlined payment processes to collect Uber’s technology fee from its driver-partners. “Now partners can see rightaway how cash trips impact their income,” Uber stated.

Cash is king, goes the business mantra. Well, it looks like the cash option has made Uber the king of the Indian roads.

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