Oh no! Will Uber shut down in India?
I love Uber. The concept is fantastic, and what I like the most is the payment channel - the fare is charged directly to your credit card at the end of the ride, and so there's no time wasted in processing the financial part of the transaction, unlike other taxi services.
However, it turns out that Uber might need to shut shop in India if they cannot meet the conditions that the Reserve Bank of India (RBI) has laid out for them to follow.
Here's why.
Transactions using credit cards issued in India have a dual-verification system. If you're transacting in person with your credit card, you're likely to need a chip-and-pin card, so there are two verifications - the credit card itself physically, and the PIN, which is entered on the terminal. Similarly for online transactions (also known as Card Not Present or CNP), the dual verification consists of the card details themselves, and a one-time-password or other authentication information.
Now, if you've used Uber, you'll notice that there is no second authentication. That's because it is billed as an overseas vendor (Uber Netherlands is the entity that actually bills you) and so there's no second authentication required, whereas Indian sellers need to build that into their payment system. And that's exactly the problem the RBI has with Uber. My guess is that this was raised by competing taxi services, which are either not able to provide credit card payment facilities at all, or in an affordable and efficient manner, but that point is moot. The RBI has given Uber time till 31 October 2014 to introduce the dual authentication system.
Put differently, if Uber cannot comply with this by 31 October, they'll have to shut shop in India. This article makes a brilliant point of the situation, where it says "...RBI’s decision creates a level playing field between Uber and Indian taxi companies — one in which all taxi companies are equally bad in their dealing with consumers, forcing two to ten minutes of time wasted with every ride." Word.
Uber is currently silent on the issue. At the same time, I'm also quite positive that Uber is managing the situation, by arranging payment mechanisms with India-based payment portals, so that they can carry on business here. They've recently launched services in more cities in India, and I'd hate to seem them disappear. Here's hoping for the best.
However, it turns out that Uber might need to shut shop in India if they cannot meet the conditions that the Reserve Bank of India (RBI) has laid out for them to follow.
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| Credit: http://www.vccircle.com/byinvitation/2014/08/25/shutting-down-uber-india-was-unwise |
Here's why.
Transactions using credit cards issued in India have a dual-verification system. If you're transacting in person with your credit card, you're likely to need a chip-and-pin card, so there are two verifications - the credit card itself physically, and the PIN, which is entered on the terminal. Similarly for online transactions (also known as Card Not Present or CNP), the dual verification consists of the card details themselves, and a one-time-password or other authentication information.
Now, if you've used Uber, you'll notice that there is no second authentication. That's because it is billed as an overseas vendor (Uber Netherlands is the entity that actually bills you) and so there's no second authentication required, whereas Indian sellers need to build that into their payment system. And that's exactly the problem the RBI has with Uber. My guess is that this was raised by competing taxi services, which are either not able to provide credit card payment facilities at all, or in an affordable and efficient manner, but that point is moot. The RBI has given Uber time till 31 October 2014 to introduce the dual authentication system.
Put differently, if Uber cannot comply with this by 31 October, they'll have to shut shop in India. This article makes a brilliant point of the situation, where it says "...RBI’s decision creates a level playing field between Uber and Indian taxi companies — one in which all taxi companies are equally bad in their dealing with consumers, forcing two to ten minutes of time wasted with every ride." Word.
Uber is currently silent on the issue. At the same time, I'm also quite positive that Uber is managing the situation, by arranging payment mechanisms with India-based payment portals, so that they can carry on business here. They've recently launched services in more cities in India, and I'd hate to seem them disappear. Here's hoping for the best.
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