Online cab service Uber is reportedly in talks with mobile-only marketplace and digital wallet service Paytm and online payment gateway PayU to integrate a digital wallet with Uber’s payment process, sources with direct knowledge of the discussions told The Economic Times. However, Paytm and Uber both declined to comment on this matter to the publication.
This became necessary after last month Reserve Bank of India (RBI) issued a directive that Card Not Present (CNP) transactions for purchases of goods and services in India had to be processed through Indian banks and payments needed to be made in INR. This negatively affected services like Amazon, Google Play, Apple Store among others, besides Uber that use international payment gateways and effectively circumvent the two-step credit card authentication process. Also, Uber charges consumer’s credit cards directly in case of taxi cancellations. This feature is not available with any other Indian taxi service provider. It is significant because the average cancellation charges are as high as 12%. RBI has given these companies time till October 31 to be compliant of the new rules.
RBI had issued this directive after Mumbai-based radio cab service Meru Cabs had demanded a level-playing field between domestic and international companies, and asked RBI to extend its recurring billing guidelines to foreign players as well, in July this year. We had first flagged this issue back in 2012, though no steps were taken at that point.
One97 Communications’ digital payments company Paytm received its semi-closed prepaid wallet license from the RBI in August 2013. It launched the service called Paytm Cash Wallet earlier this year in January. Naspers-owned payment gateway company PayU India, which runs the online payment solution PayU Money (formerly known as PayU Paisa) first launched an automated all-in-one-payment solution targeting e-commerce marketplaces and aggregators in October 2013. It launched a semi-closed wallet service in February 2014, with cashbacks for every transaction. But does PayU even have a wallet now?
Uber in India
Uber forayed into India in August 2013, with an initial launch in Bangalore and then extended its services to Hyderabad, New Delhi, Chennai, Pune and Mumbai. Last month Uber launched its services in four new cities in India – Ahmedabad, Jaipur, Chandigarh and Kolkata. However, its mandatory credit card payment process was considered to be a barrier to expansion. The RBI directive might prove to be a blessing in disguise as now Uber will be able to reach out to a much larger section.