Google taxi service Uber ties up with Paytm to meet RBI’s payment norms
13 Nov 2014
After being pulled up by the Reserve Bank of India and facing increased competition from other cab services, taxi app Uber is reportedly all set to take on both issues with a investment push of $400 million and a new mobile wallet-based payment.
India is the largest market for the Google-promoted Uber outside the US. It has come out with a compromise formula before the expiry of the RBI's November deadline to ensure it continues its operations here.
Uber has tied up with payment services firm Paytm after the RBI said it had to have a two-step verification for card-based transactions; and users of the taxi app will have to open pre-paid virtual wallet accounts in order to make payments.
Users of the app will have to now open accounts with the payment services firm and pre-load their accounts with cash that can be made through credit or debit cards.
Unlike earlier when users were debited the amount from their registered credit or debit cards with Uber after a journey, travellers are now required to pre-load their wallets before a trip and the fare will be deducted from the online balance after the journey.
Competitors like Meru Cabs, Taxi for Sure and OlaCabs allow customers to either pay virtually using online pre-paid wallets or direct cash payments to the taxi drivers. However, Uber, whose unique selling point globally has been cutting out cash-based transactions, is not expected to follow that model.
Competing against taxi services that have larger fleets, Uber has begun offering discounts to customers and is reportedly planning to pump in more money into its Indian operations.
According to an Economic Times report, the taxi providing service could invest over $400 million in India which it could use to strengthen its presence, expand into new cities and use it to attract more cab providers to the service.
The proposed investment push by Uber into India comes as Ola Cabs received a $210 million boost from Softbank recently.
Uber has also been attempting, like its competitors, to attract more taxis to it by allying with finance houses and automakers to make it easier for cab owners to buy new vehicles.
Earlier reports had indicated that Uber is planning to raise at least $1 billion more in capital from its existing investors, which includes Blackrock, TPG, Google Ventures and Menlo Ventures, and new funds from beyond Wall Street and Silicon Valley, especially in Asia.
The company reportedly still has $1 billion in the bank from its most recent round of fund-raising.
