In India, Uber has realised, cash is king.
In another two weeks, India will become the first major international market where Uber will introduce cash payments across all cities, a spokesperson told Quartz. India is Uber’s largest market, in terms of the number of cities it serves, outside the US.
By Sept. 2, Uber had already rolled out the cash payment option in 21 of the 22 Indian cities—including Delhi, Bengaluru and Kolkata—where it operates. Mumbai is the only exception, but should be on board shortly.
It all began with an experiment in Hyderabad this May, when the southern India metropolis became the first city in the world where Uber tested out its cash payment system.
“Indians are more comfortable paying in cash,” an Uber spokesperson told Quartz in May, explaining the move. “As we look to expand operations in India, we have understood that cash payments will be a crucial factor in driving that growth.”
Within a couple of weeks of the trial getting underway in Hyderabad, Uber took the experiment to Kenya’s capital city of Nairobi. Subsequently, it tested out the cash payment model in a handful of other countries, including Vietnam.
“Between Hyderabad and Nairobi, we got a lot of insight into consumer behaviour,” the Uber spokesperson said. For instance, the app-based taxi service noted a jump in first time users immediately after cash payments were introduced, followed by a more gradual migration to other payment options.
Uber’s move towards cash not only has implications for other regions—many Southeast Asian countries, for example, prefer cash over cards—but could also be a potential game changer for the company in India’s increasingly challenging marketplace.
For one, India is extremely comfortable with cash, with 90% of all transactions in the country involving banknotes and coins. Even 50% of all payments at Ola—the country’s largest online cab aggregator and Uber’s biggest competitor—are conducted in cash. By opening its platform to cash payments, it will only get easier for Uber to expand, especially in smaller Indian cities where cards and online wallets are scarcer.
In any case, Uber’s seamless credit card transaction model, which is used in most markets globally, wasn’t really operational in India. Last year, the San Francisco-headquartered firm was told by the Reserve Bank of India that it couldn’t operate in the country without complying with the central bank’s rule of two-step authentication for card payments. That meant every time a card was used, the customer had to approve the payment by entering a one-time password.
Cornered, Uber chose to partner with Paytm to create online wallets for its consumers, which could be topped up and then used to pay for ride. Although more convenient than authenticating each payment, even the online wallets weren’t entirely hassle-free.
By moving to cash, Uber’s brought India’s most popular payment option on to its platform.