Uber scores a point in India by sorting out credit card payments

From today, Uber riders in India will again have the option to pay by credit card. This had been suspended last year following complaints by local taxi services to the Reserve Bank of India. They had pointed out Uber was violating Indian foreign exchange regulations by routing credit card payments from customers to Netherlands-based Uber BV.

Most of the payment was converted back to Indian currency when it was routed to cab drivers’ accounts in India, after adjusting for commissions, promotions, etc. But the RBI agreed with local competitors like Meru that such transactions violated rules meant to prevent fraud or flight of capital from the country, and that foreign players could not be allowed to bypass a two-stage credit card authentication process required for digital payments in India.

Uber then added Paytm’s digital wallet to its payment options. In a way, this helped Uber because it made the app accessible to more people. Credit card users are a small set of the population in India. At the same time, many users who find credit card payments more convenient than registering for a digital wallet and topping it up, will be happy to see the return of the credit card payment option.

“Adhering to RBI regulations, there shall be two-factor authentication flow built in to the app and we’ll need you to enter your Online Banking Pin or One-Time Password before we can charge the fare to your card,” says Uber in a statement. Any number of cards can be added on the app and the Paytm wallet option will also continue.

Uber has tied up with mobile payments company MobiKwik to power the credit card and debit card payments. Users need to tap the credit card option on the Uber app and follow through with the steps for two-factor authentication, which requires the bank account’s PIN number or a one-time password.

Uber has been going all out to win over customers in India in a battle with local rival Ola. It has started a pilot program in Hyderabad – capital of the southern state of Telangana – for cash payments, which will be a global first for the company.

Last week, it also signed a deal with the Telangana state government to invest US$50 million into training “driver entrepreneurs.”