May 11, 2015 / 6:45 PM / 5 years ago

Uber tests cash payments for cabs in India

An employee works inside the office of U.S. online cab-hailing company Uber, on the outskirts of New Delhi, India, April 24, 2015. REUTERS/Anindito Mukherjee

MUMBAI (Reuters) - Uber is testing cash payments in India as the online taxi-hailing company seeks a stronger foothold in a country where many fewer people have credit cards than internet connections.

San Francisco-based Uber has grown rapidly in value to be worth around $40 billion. But in India it has lagged local rival Ola, which has about 80 percent of the organized cab market.

Many analysts say that is because Uber has not adapted its business model enough to suit India’s needs.

Uber said on Tuesday it was piloting cash payments for cabs in the southern Indian city of Hyderabad, in a first for the company globally. Until now, Uber’s mobile application around the world has charged customers through credit cards or other electronic payment methods.

India has about 20 million credit cards for a population of 1.3 billion. Though the government is trying to change this, most purchases are done with cash.

Ola and other Indian cab services accept cash for rides, while e-commerce giant Amazon introduced a cash on delivery option when it launched in India.

“Tradition dictates that cash plays a big role for Indian consumers,” said Siddharth Shanker, Uber’s general manager in Hyderabad.

In April, Uber followed Ola by tying up with autorickshaws - affordable three wheeled taxis that ply Indian roads - in some cities as it tries to reach more customers.

Uber was banned in New Delhi following allegations of rape against one of its drivers in December, but has found support from India’s transport ministry.

Reporting by Nivedita Bhattacharjee in Mumbai; Editing by Mark Potter

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