November 14, 2014
When it comes to a payments experience, the ‘Uber’ experience is hard to forget. This seamless payments experience requires one to simply add payment card details once, forget about paying your fare using a wallet and simply take the ride. But this payments experience is currently poised to re-model itself completely just for India where the ‘Uber’ experience can apparently not be the way to pay.
Uber has adopted another wallet system in order to comply with RBI’s (the Indian Central Bank) regulation which requires Uber to have two-step verification for card-based transactions. Users of the taxi app will now have to open prepaid virtual wallet accounts in order to make payments. Uber has tied up with Paytm for the mobile wallet service.
Also as reported by The Economic Times, Uber might be investing
Let's Talk Payments got in touch with Vijay Shekhar Sharma, Founder & CEO of Paytm, to know more about the news:
Not many people know that we named ourselves so because it is short for Pay Through Mobile. Paytm, since its inception has made leaps in making the experience of buying anything super easy for every one. The fact that over 16 million folks have adopted this method of payment is the best testimony to the trust people have in payments through Paytm and we value that more than anything else.
So it was only natural that when we plan to extend our payment experience we keep the convenience while ensuring the trust you’ve placed in us stays put. And who could be a better partner than the fine folks at Uber, who thought of fundamentally changing how people ride in cabs!
LTP Ques. - What are the good things that Uber saw in Paytm and why do they need a wallet?
'1.) Paytm is india 's largest payment platform. We have 16 million users and doing $600mn+ Annual GTV run rate. For uber, we offer the largest reach and best user experience of one touch mobile payments.
2.) Uber needed wallet to offer other payment options to consumers beyond credit cards. Paytm wallet can be loaded using debit cards, net banking and in store cash too. It gives uber reach to non credit card
LTP Ques. - Do you see that other taxi aggregators, MNC apps and commerce players would go for wallet tie-ups as well?
Vijay - 'Paytm wallet has more than 15,000 merchants accepting it. We are in discussions with quite a few of other MNCs as well. We are already live with many apps who have adopted in-app payments. We believe that Wallet gives superior mobile commerce experience vs other payments options.'
In order to continue its operations in India, Uber would be shedding the USP (unique selling proposition) that it had in payments. Uber customers will now have to pre-load the Paytm wallet in order to use the taxi service. Under the new arrangement with Paytm, the two-factor authentication would only be done at time of recharging the Paytm account. After each ride, the fare would be automatically debited from the digital wallet. The current payment card based auto-debit feature would continue till the end of this month.
In scenarios where the user runs out of money and has already taken the ride, the Paytm account will go into a negative balance and would be adjusted once the user recharges the account again. The following screenshot posted on Twitter reveals the payment options you get when you try to add one and it reveals that international credit cards
As reported by Wall Street Journal, Uber has cited its plans to raise more than $1 billion in funding. Uber has been competing fiercely in India for market share with other cab providers like Ola and Taxi-For-Sure. Since its launch in India, it has expanded its network to include more than 15,000 drivers. Uber has also announced plans to partner with financial services firms and automobile manufacturers to launch a vehicle financing program for Indian cab drivers.
The Indian taxi market has been estimated at around $9 billion. Out of this, only 4-6% is really organized. Uber has a strong backing of companies like Goldman Sachs and Google Ventures. Last year, the cab service had clocked over $1 billion in gross bookings globally. Uber currently has its presence across 200 cities.