Starting today, Uber is compliant with a Reserve Bank of India rule that requires two-stage authentication for online payments through credit or debit cards. But an Uber blog post makes no secret of its displeasure at the way it is being made to do business in India:
While this requirement is intended to provide more security for consumers, it is an antiquated solution that is cumbersome for consumers and stifling for businesses across India.
Two-stage authentication means that a customer can’t just link a verified credit card to an ecommerce site or any other online vendor. A second verification is done through a ‘Verified by Visa’ process or by generating a one-time password on a mobile phone.
Uber had initially been given a deadline of August 31 to stop accepting payments on credit cards linked to its app, which had not implemented two-stage authentication, and routed money from customers to drivers via an Uber account in the Netherlands, after commissions were deducted or bonuses added. Apart from risk of credit card fraud, concerns were expressed that this could be a channel for flight of capital from the country in violation of foreign exchange regulations.
Interestingly, it wasn’t the Reserve Bank of India that on its own brought Uber to book. Older taxi operators like Meru, who were losing out big time to Uber, ganged up and made a joint representation to the RBI complaining that Uber was not riding along with the rules. The RBI then issued a notice to Uber that it was violating the regulation, which had actually been on the statute since 2009.
Uber asked for and got a month’s extension of the deadline till November 30 in order to work out an Indian payment gateway for its app with two-stage authentication. It then tied up with mobile payments enabler Paytm for a digital wallet which is embedded in the Uber app. Customers wanting to use the Uber app in India now have to first create a Paytm account. This is not hard to do, but a number of users might be put off at the thought of creating a new account.
Not surprisingly, many of Uber’s users in India have yet to convert to the wallet, despite a week of free rides leading up to the deadline yesterday. Uber is clearly not happy with the rate at which conversions are happening. It asked for a further 45-day ‘grace period’ from the RBI to give more time to its users to make the transition, and also protect its drivers from loss of business from those who are slow to adopt the wallet. The RBI is yet to respond.
Uber is making a big push in India. Last week, it entered an eleventh city, Kochi in the southern tip of the subcontinent. India is the only country where Uber has got into a payment tie-up like the one with Paytm, so that it doesn’t get shut out of a huge market. But at the same time, it is campaigning for a more business-friendly environment with new regulations which take into account digital innovation.
“Despite consumer preference and in the face of rapidly changing business expectations, India’s one-of-a-kind 2FA (two-factor authentication) requirement persists, causing a major challenge for businesses trying to offer Indian consumers a better purchasing experience,” says Uber’s blog. The post is titled, “Uber is now compliant but less convenient.”
That is a sentiment which will be shared by many international companies either doing business in India or wanting to enter this market where smartphone and internet use is surging. Neither Apple’s app store nor the Google Play store have a two-factor authentication system in place in India. Will they be the next targets for the Reserve Bank of India? Or does the Indian consumer deserve better? Let us know your thoughts on this in the comments section.
See: Why is Uber sweating in India?
This post Uber is pissed with India’s payment rule, calls it antiquated, cumbersome, and stifling appeared first on Tech in Asia.
Uber is pissed with India’s payment rule, calls it antiquated, cumbersome, and stifling
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