Ola lets people ride now, pay later to combat India’s cash crunch

An Ola-branded taxi. Photo credit: Ola.

Amidst the chaos and confusion of the demonetization move by the Indian government, cab hailing app Ola today launched a credit feature that lets commuters take a ride now, but pay only after seven days.

At the end of the seven-day period customers can pay their bills via net banking, debit or credit cards, or through the Ola Money wallet. The company said its corporate clients such as Larsen & Toubro and IBM have also subscribed to the Ola credit feature for their businesses.

However, Ola will extend the credit to its individual users selectively, depending on their transaction history.

The government has failed to meet the demand for 100 rupee notes.

The service is being launched in India at a time when cash conservation is important for many.

“Credit is an important step towards our goal of ensuring mobility for a billion Indians,” says Raghuvesh Sarup, chief marketing officer of Ola.

Last week Indian Prime Minister Narendra Modi announced that banknotes of 500 and 1,000 rupee denominations would be withdrawn from circulation to tackle corruption and counterfeit currency.

In the absence of higher denominated currency, only 100 rupee notes are being accepted for cash purchases. However, the government has failed to meet the demand for 100 rupee notes, which has led to long serpentine lines at banks and ATMs. People have been forced to conserve whatever cash they have on them, which has given a much-needed fillip to online transactions.

Several ecommerce companies including Amazon, Uber, and others have stopped cash on delivery options in this view. Ola, on the other hand, has decided to go ahead with its credit feature that will allow users to not pay at all, up to a period of seven days.

It remains to be seen if Uber, Ola’s closest rival, will also adopt the move. Interestingly, Uber broke from its tradition of accepting payment only via card, to allow cash payment last year. The move was in response to Ola’s success with cash-based payments.