Uber has been forced to set up a new system with local payments firm Paytm
One of the biggest problems India’s commuter faced was getting from one place to another in a fairly decent and free of trouble kind of a way. This problem however was taken care of by the Uber service which gained tons of popularity in the country because of its convenient, cashless payment system. It is already a great deal to hail for the cab and then another problem arises when you have to argue with the drivers over the fares. The introduction of Uber service in India meant not having to tackle these issues and face such notorious looking drivers. After all this, it doesn’t appear surprising at all that India became Uber’s largest market outside the US.
An effortless payment system was all that these Indian commuters needed; those who would ride the Uber car would simply walk out and their credit cards would be charged for the fare. However, a long-running dispute with the Reserve Bank of India (RBI) about Uber’s use of customers’ stored credit card details is putting the business at risk.
With this dispute in place, things are probably going to change for the Uber commuters. Apparently it came from the numerous complaints which were filed in by the old school taxi drivers of India. As a result of this, the company has been forced to change its method of payment with collaboration with the local payments firm Paytm that allows users to load cash onto a virtual wallet that can then be used to make transactions.
The recurring payments using credit cards have some pretty stringent rules in India. The RBI requires a mandatory two-step authentication system in case of the “card not present” transaction which comes into effect through a verification code that is sent to a customer via text message or email. The customer then has to enter this code in order to complete the transaction. Uber however was made exempt from the two-step authentication process by routing payments through a foreign subsidiary. So Uber had kind of been dodging the regulation process; the receipt was issued on behalf of the Indian driver but the payment was received in rupees by a Dutch bank.
The loophole was closed back in August and it was stated by RBI that for all online payments for goods and services within the country, “the acquisition of such transactions has to be done through a bank in India and the transaction should necessarily settle only in Indian currency.” The hometown taxi companies, who had been facing intense competition from Uber services, brought this matter to the attention of the Reserve Bank. The homegrown market is already increasingly growing in size; in total there are 2.3 million registered taxis and an estimated 5 million daily taxi rides; the sector is valued at about Rs54,000 crore ($9 billion).
The completion soon had to take its toll and now some local taxi services have started following the Uber service.
The process was fairly simple when the service first launched in India. You had to enter your credit card only once and after this you could repeatedly use the service without the need to enter details again for payments.
But now the Uber users will have to accommodate with the new system which requires them to first fill in their virtual wallets with money. This wallet will be powered by Paytm which requires a separate app that’s available for Android and iOS devices, and link their Paytm wallets to their Uber accounts. The minimum recharge amount is Rs. 100 ($1.60). the fare will simply be debited after every car ride and once you run out of money, the wallets will have to be refilled with the two-step authentication code.