Uber to launch cash payment option in India

Ride-hailing app Uber is opening a new front in its attempts to compete with cheaper rivals in fast-growing emerging markets by offering Indian riders the chance to pay with good old-fashioned cash.

Beginning on Tuesday, the San Francisco-based group will allow customers to hand over rupee notes to pay for rides in the southern technology hub of Hyderabad, the first time Uber has offered the option in any market.

The move marks a radical departure for a company that prides itself on the simplicity and efficiency of letting customers use credit cards or online payments systems only - a model that is set to struggle in India's cash-dominated mass-market.

It comes as Uber is reported to be readying another huge round of funding to fuel its global expansion. After raising more than $4bn in the past year, the Wall Street Journal reported on Friday that Uber is looking to raise at least another $1.5bn at a valuation likely to exceed $50bn. The company has not commented on its funding plans.

Uber is investing heavily in India, the company's second-largest market by users and its largest measured by the number of cities in which it operates.

The new cash option is intended to help it compete more effectively against cheaper local cab groups such as Ola, which recently raised $314m in a new round of financing at a valuation of $2.4bn - and which, in common with other domestic car companies, has always offered cash payment options.

Just over 3 per cent of India's adult population of 888m used a credit card to make a payment online last year, according to the World Bank, underlining the extent to which Uber's payments model keeps it quarantined from the country's vast middle market.

Uber described its cash move as an "experiment" to be tested on a small segment of users in Hyderabad, a city known for its profusion of IT parks and chaotic traffic.

If successful, however, the company has said it could offer the option in other emerging markets.

Uber's latest initiative is part of a wider trend in which major global technology companies, including Twitter and Facebook, are increasingly viewing India's vast domestic market as the ideal testing-ground for services which could then be rolled out to other countries.

It also shows how the one-size-fits-all approach of many internet companies to international expansion is becoming harder to maintain as digital technology meets the physical world, with individual markets requiring localised strategies.

"There is a huge focus on India, which along with China is a priority, and resources are being diverted there," said Siddharth Shanker, Uber's general manager for the Hyderabad region.

"But there are lots of things we do here in India which will have meaning as we expand deeper into Lat Am, into Africa, into other emerging economies," he added. "The reason we are doing these experiments is then to roll them out in multiple places around the world."

Uber is also attempting to avoid mistakes in China, where its service has been eclipsed by local operators such Didi Dache and Kuaidi Dache, which dominate the lower end of the market.

Additional reporting by Tim Bradshaw in San Francisco

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