Game on Ola: In a first, Uber accepts cash payments in Hyderabad, other cities to follow suit

Taxi hailing app Uber, which plans to raise $1.5 billion in a new funding round that will boost it’s valuation to a whopping $50 billion, is clearly feeling the heat in India’s competitive market which is dominated by rival Ola. Apart from thinking up innovative ways to press ahead of its rivals in India, it seems that Uber has finally given in to the much needed demand of accepting cash payments. Uber ready to accept cash payments in Hyderabad Soon riders will be able to pay drivers in cash directly in Hyderabad at the end of their taxi ride as Uber is conducting am experimental test in the city. If successful, the cash payment option will spread to other cities in India in the coming months. It must be noted that such an experiment is a global first for Uber, which is present in over 300 cities across the world. The company says the idea is to gain a deeper understanding of consumer behaviour/ preferences/ usage trends so that it can develop more robust payment options for the local market, but it is obvious that the move is a direct all and out war against rival Ola. “Uber is all about providing our community with more options that deliver hassle-free convenience at the push of a button. Tradition dictates that cash plays a big role for Indian consumers. As a data-driven technology company that has seen strong growth in India we feel this is the right time to explore the extent of this predisposition when it comes to our service. India, for us, is a hotbed for innovation globally and experiments such as this provide us deeper insight into the local market and help us innovate around the evolving needs of consumers,” said Siddharth Shanker, Hyderabad GM, Uber. How does it work?  [caption id=“attachment_2168061” align=“alignleft” width=“380”] Reuters[/caption] Uber users have to open the app, go to the payment section and select cash as the payment option before requesting for a ride. Once, the ride is over, users can just pay the amount shown directly to a driver. However, not everyone will see the cash option instantly as this is a phased roll out. However, the cash option will be available to all users in Hyderabad within the next week. Users also will not need any minimum balance in their Paytm wallet to be able to book rides with cash as their  payment option. Moreover, there is no option to  make part payments on cash trips with thePaytm wallet and vice versa. There is also no booking fee or additional charge to riders. Why Hyderabad? “Hyderabad was the only city specifically selected for this experiment because it provides us with the right environment to test a new payment option amongst a sizeable and sophisticated rider and driver community,” Uber said in a statement. The company believes Uber has a sophisticated rider base, a strong local team to conduct the experiment successfully in Hyderabad. “Our technology has been widely adopted by a very diverse rider base in Hyderabad, which is key to providing us the insights we are looking for from this experiment, Karun Arya, Communications - South Asia & India told Firstpost. Uber says taking the cash payments option to international markets is not off the table as there are other economies ( apart from India) where cash is still the most ububiquitous method of payment. But as of now, the current focus is India. This is not the first global first experiment for Uber in India  For Uber, India is one of its fastest growing markets. India’s low rate of car ownership stands at about 24 cars per 1,000 people. This presents Uber with a huge opportunity, which is why despite the regulatory hurdles since December 2014, it has refused to back down. Last month, it entered the middle-class India’s territory by launching uberAUTO, a new hailing feature for autorickshaws in New Delhi. The three-wheeler can be summoned with the tap of a button on the smartphone app and Uber will not charge a booking fee and rides will be offered at government-mandated fares. Passengers will have to pay the autoricksaw driver in cash at the end of the ride. This cash-only feature was another global first for Uber, which only accepts digital payments elsewhere. Clearly the company is looking at winning over a much larger userbase as Ola is the largest player in the on-demand auto booking space with over 40,000 autos on its platform in six cities including Bangalore, Delhi and Pune. Soon after the auto launch in the capital,  Uber rolled out its new SOS button as it looks to boost security measures following the alleged rape of a customer by one of its drivers. The SOS  button sends live GPS updates to local police, provides police with information on the driver, and sends details on the passenger reporting the issue, in addition to initiating a phone call with the police as it initially did. That information, which should enable police to track an Uber vehicle, will appear on a display that Uber installs for the local police.  The San Francisco-based company also released the “Send Status” feature in India, which allows users to share details about their driver and route with up to five contacts in a move intended to increase accountability.  Prior to that, the company had also started more rigorous screening of its drivers by doing extensive background checks  after the crisis in December when a woman was ‘allegedly’ raped in a taxi on its platform. In November, 2014, Uber had to let go of its seamless credit card payment mechanism after it was found to be against RBI’s rules for not enforcing two-factor authentication. To work around the situation, Uber then tied up with Paytm for its mobile wallet solution. Currently, Uber users in India need to first have a Paytm account and top it up with cash before being able to book a cab. It is also doing all that it can to ramp up its operations here despite the ban in Delhi. According to a report in the Business Standard, it has acquired a Delhi-based company, renamed Uber India Technology (UIT), to be at the centre of the firm’s operations in Delhi, where it is presently on a collision course with the city government’s transport department. It  has also altered its MoA, a key statutory document stating the vision and purpose of the firm, to suit the Radio Taxi Scheme, 2006, which governs the capital’s taxi business Doling out offers and schemes By offering schemes to both riders and drivers, Uber is clearly attempting to up its ante. While Uber is offering a ‘double referral bonus’, where an existing user gets rides up to Rs 600 for onboarding every new member and the first ride for the new member is also free for up to Rs 600, it has already slashed fares about 40% earlier this year, rolled out promotions such as discount helicopter rides, and is offering per-trip bonuses to drivers to encourage them to work for the US company. While the company’s revenue model involves charging 20 percent commissions on every bill generated through its platform, the real acid test for Uber will be when it starts scaling back its incentive schemes. Will it then still manage to retain its customers and sustain growth sans these offers?