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Updated: Uber Expands To India; Mandatory Credit Card Requirement

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Updated with Uber’s reponse below

US based online cab service Uber has forayed into India, by launching its services in Bangalore. The company however notes that it will be under “secret testing mode” in Bangalore for the next few weeks, during which the availability of cars will be limited. The launch was quite expected considering Uber had listed three job openings in Bangalore recently.

At the time of writing this article, Uber offers only high end sedans called ‘UberBLACK”. Some of the cars available include Toyota Corolla Altis, Mercedes Benz S-Class and Honda Civic. Its not clear if this also includes a private driver like in the United States. Uber informed that other vehicles are in the works. It offers five types of vehicles in the US – UberBLACK, uberX, uberTAXI, UberSUV and UberLUX. Update: Uber has informed that the cars currently available include Mercedes E-Class, Toyota Camry and Honda Accord.

Uber currently offers cab booking through its iPhone and Android apps. We tried the Android app and noticed that one needs to sign in or register for an account before making a cab booking. The app allows users to sign in through their Google account credentials or by filling up a form with requisite details like email address and mobile number.

Credit Card Necessary: Following this, users need to link their credit card to their account, either by manually entering their credit card or scanning their credit card and there is no option to skip this step. While this approach works in the US due to high credit card penetration, we feel this might turn out to be a problem for Uber in India, since the credit card penetration is still quite low in the country and this might result in the service being limited to select users only. In comparison, TaxiForSure and Olacabs offers various payment options like credit & debit cards, net banking and cash cards among others.

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Update: We missed this earlier, but Uber app is also storing CVV within the app, which is not allowed as per RBI guidelines (Hat tip – Shiladitya M). We are not sure how this works, but Uber is probably using the same loophole that Google and Apple are using with Play Store and iTunes Store respectively. However, the problem here is that Uber app asks for CVV during registration itself. (Related: Note To RBI: Need A Level Playing Field In Online Billing In India).

Update 2: Uber has informed Medianama that it doesn’t store CVV anywhere. It uses the CVV to authenticate the validity of the credit card and setup recurring billing on the card, which allows the company to charge a card if the user has been authenticated once. It is this recurring billing option which is not available for Indian businesses since RBI mandates a 2 factor authentication for all credit card transactions. However, since Uber uses a global payment gateway, it is not bound by these RBI guidelines because RBI has no jurisdiction over these transactions.

We weren’t able to try out the booking feature, since the app requires a verification code to verify the mobile number and we are yet to receive the verification code via SMS.

Pricing: What’s interesting is that Uber’s prices are quite competitive, considering it offers only high end cars. It charges a base fare of Rs 150 and Rs 20 per kilometer along with Rs 2 per minute and has a minimum fare limit of Rs 250. In comparison, Olacabs charges Rs 21 km with a minimum fare limit of Rs 150 for normal sedans while TaxiForSure charges Rs 200 for the first 10km and Rs 14/km henceforth.

Where Next? If Uber’s job listing page are to go by, the company plans to roll out its services in New Delhi, Hyderabad and Chennai. Strangely, there is no mention of Mumbai yet, which we feel can be an important market for Uber. Globally, Uber is available in 44 cities across 18 countries and has been rapidly expanding over the past few months. It launched operations in Cape Town, Dubai, Honolulu, China, Johannesburg and Mexico City among others.

The company has raised around $307 million until now, which includes the massive $258 million investment from Google Ventures and TPG Capital last week.

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Other Players: Besides Olacabs and TaxiForSure, other players in the segment include Meru CabsSaavari Car Rentals (raised Rs 5 Crore from Inventus Capital Partners), BatchCar (previously known as Sharedcab.com and raised Rs 5 crore from Blume Ventures and other angels), YourCabs.com (raised angel funding from Sprism Investment Pvt Ltd), Taxiguide (raised Rs 25 lakh in angel funding from Anand R P), and Getmecab.com among others. Last week, JustDial had also launched online cab bookings.

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