
Shutting down Uber in India was unwise - dsr12
http://ajayshahblog.blogspot.ca/2014/08/shutting-down-uber-in-india-was-unwise.html
======
ajju
The title of this post is clickbait. Uber is not being shut down in India.

The RBI rule requiring a one time pin for all online transactions is unwise, a
huge barrier to good UX, and should be removed.

Having said that, Uber is not being shutdown in India. Even if no changes are
made to this rule by the Oct 31 deadline, which of the following is more
likely: Uber leaving a country with several hundred million potential users,
or Uber (and every other company who does online transactions) changing their
UI flow to accommodate the RBI requirement?

Disclaimer: My company Summon competes directly with Uber.

~~~
deepGem
"The RBI rule requiring a one time pin for all online transactions is unwise,
a huge barrier to good UX, and should be removed" \- That rule is only in
place because India does not have enough consumer protection laws. In case of
credit card fraud, the consumer is screwed. Neither the bank nor Uber will own
the responsibility for the fraud. Yes,the chances of such a fraud are low but
the risk of losing a ton of money is very high. Also the interest rate on
credit careds in India is massive - 36% p.a. So a potential loss to a consumer
because of a fraudulent transaction is immensely high.

So yes, this two factor authentication is a royal pain in the ass but it's
very much required in a country in which the consumer is not the king.

~~~
alamtabrez
"That rule is only in place because India does not have enough consumer
protection laws. In case of credit card fraud, the consumer is screwed.
Neither the bank nor Uber will own the responsibility for the fraud.".

So what should we do? Instead of ensuring that consumer protection laws are
improved and banks+law enforcement agencies and made answerable; let us make
the consumer's life tougher. I am sure that it is always easy to make laws
that can control sections/units than to control masses.

Now let us see if it a slight inconvenience to the consumer of there is a
bigger picture behind. All these security measures (such as two factor
authentication, chip based cards etc etc) involve costs. So who is going to
pay for the costs? Would RBI pay for it? Would the banks pay for it? I do not
think so. It is going to be the end consumer who is going to pay for all this.

If you do not believe me, read this article on timesofindia (titled: Banks
seek to cap free ATM use at 5 times per month), you would realize that you
would need to pay in case you took out money from your account (from your very
own bank's ATM) from an ATM more than 5 times a month. What does this mean? I
need to pay for taking out MY OWN MONEY!

So let us get real! Look for solutions for betterment of people in reality and
not just in a phony manner!

~~~
deepGem
Well, improving consumer protection laws is not that straightforward. It
involves government and their shitty decision making abilities. You have to
pass a bill blah blah.

RBI cannot wait for these laws to be enacted. In the interim they've taken
these steps and this is not done in a phony manner.

Regarding costs - ultimately the consumer will pay for added security - be it
the two factor authentication or the chip cards or any other security or
protection measure. There's no debate about that. However, in case of a
disputed transaction the cards company/Uber will need to own up responsibility
which they won't.

Well, this authentication is RBI's solution for betterment of people, comes at
a convenience cost though. If you think there are better alternatives, it
wouldn't hurt to shoot an email to the RBI team. Actually let me see if that's
even possible.

------
smcl
"between two to ten minutes are wasted in dealing with the payment" \- how on
earth is this possible? I can imagine two minutes if the driver has to dig
around in a big pouch of mixed up change, but _ten_?

edit: I realise this is slightly off-topic and doesn't change the central
premise of the article, which is that the legislation that forced Uber to
employ a loophole is a bad thing. But what the hell, I'd go out of my mind if
a paying for a taxi took 10 minutes.

~~~
beachstartup
this just happened to me in southern california. i spent at least 10 minutes
with the driver at the end of a ride trying to pay him because i had no cash,
and his credit card terminal had no reception because we were up in the hills
(he tried several times, fiddled with settings, etc). he then called dispatch
to ask some questions, and finally just wrote down my info and let me go
without paying. and now i have no idea if he's going to charge me or not.

you won't go "out of your mind" if this happens because when it's happening it
seems totally normal and you will take it completely in stride unless you are
late for a flight or are just a complete asshole. i was going back to a
wedding and was kind of drunk and didn't really care. it's only when you
analyze this on a macro level as a business practice that it seems insane.

~~~
k-mcgrady
Why didn't he just drive you to the nearest ATM so you could get out cash?
Surely there would be one within a 1 or 2 mins driving distance. I have a
different perspective on this as I'm pretty certain cab drivers here don't
accept card. Everybody pays in cash. It's easier and faster and if you don't
have any on you you ask the drive to stop at an ATM on the way to your
destination.

~~~
icebraining
_Why didn 't he just drive you to the nearest ATM so you could get out cash?
Surely there would be one within a 1 or 2 mins driving distance._

Really? Up in the hills in a place with no cellphone connection?

I don't know California, but here you could be driving for hours without
finding an ATM if you're far enough in the mountains.

~~~
k-mcgrady
No idea exactly what is meant by up in the hills as I'm not from CA either. If
you're taking a cab somewhere in the mountains though maybe you should be
prepared for situation and have some cash on you. TO be honest the driver also
should have made the passenger aware that up in the hills his credit card
machine likely won't work so if they need to stop at an ATM they can.

------
rikacomet
Well, it was a bad move in the first place to play around with loopholes on
part of Uber. Though its services are a win-win for Indian Customers,.. Uber
started on a wrong note in the first place.

There are hundreds of MNC operating in India, including global giants like
Pepsi, MS, etc. Though they are not entirely clean themselves especially when
it comes to factors such as environmental clearances, at least on paper none
of them messes with RBI's financial guidelines. It is the RBI's job, to check
anyone who is playing with the financial rules in place in India. Had Uber
tried to negotiate, and negotiate hard.. it wouldn't have ended up shutting
down.

Uber had a good chance to learn from Paypal, and what led to its demise was
exactly the same thing .. avoiding the extra precautionary measures in place
in India. Instead of giving in to RBI, taking a stubborn stand. The CEO was
supposed to innovate the strategy at this point.

Amazon had previously kept itself away from the same tangle, and for years
Indian e-commerce was dominated by ebay, until recently. Amazon re-entered the
Indian market, albeit on attempt 3 or 4 now as Amazon.in

Now that is done and over, Uber's re-entry would become much harder, cause as
they say "first impression is the last impression"

------
gopalv
I think Uber got hurt in India because they used a foreign exchange
transaction for moving money between a buyer and seller present in India.

Money was being moved through USA, to avoid adhering to India's jurisdiction
on Credit Card charge rules.

RBI is fairly paranoid about forex (like cofeposa).

But I think Uber was schooling the taxis in B'lore on how to deal with
customers. Would be a shame if they cancelled out that part for the payment
convenience.

Ignore the payment details, the pickup service itself was bloody convenient
when I visited Bangalore last month, because I didn't need to have two phone
conversations on a pick up about "where are you saar?" and "I see a building
called Shiv Sagar on my left".

I'd rather buy "Uber credits" or something, just to avoid that.

------
selvakn
A possible solution is prepaid, which is followed in a lot of industries (ex:
telecom)

With Uber, you can prepay per month a certain amount with all the two factor
authentication and just use it. I understand the complications like how can we
authenticate the user when he/she boards and make sure the account has
(enough) credit, etc. But I think they should be workable.

------
impendia
Up to ten minutes to pay? Does anyone actually put up with this?

In India autorickshaws are ubiquitous, extremely cheap, and I never had any
problems paying. I was never tempted to try to find a taxi instead, although
if I was there for more than a couple of weeks the pollution (autorickshaws
are open at the sides) would get old fast.

~~~
jyothepro
I have used autorickshaws in Bangalore and its a big pain to have exact
amount. Some drivers dont have change and we have to negotaite or sometimes
find a nearby store where we have to buy something to get change :(

------
fleitz
"When you finish a taxi ride, between two to ten minutes are wasted in dealing
with the payment."

How? On what planet? This takes about 30 seconds, tops. Why is the driver
digging around for change? Are you too cheap to round the tip to the next
bill?

To solve the problem Uber solves please read the following handy tips:

1\. Carry cash, in your wallet, if you're unfamiliar with it, you may obtain
it at an ATM.

2\. As you're approaching your destination look at the meter, this will be
roughly the amount of cash you'll need. Move the decimal to the right one
digit and multiply by 2, this is the tip. Add it to the amount on the meter.

3\. Select the closest amount of bills to this amount eg. 20.57 means a $20
bill.

4\. Hand this to the driver, say 'keep the change' and get out of the car.

~~~
Fuzzwah
"On what planet?"

Followed by what I'm taking to be a very American centric idea of how a taxi
ride is completed.....

~~~
fleitz
Ok, how is it done in India that could possibly take longer than 30 seconds...

~~~
plinkplonk
It doesn't. It takes about 30 seconds. A minute max if both sides are fumbling
for change etc.

------
pranayairan
common, all RBI wants is the service provider to settle money in India if paid
by Indian customer to an Indian Customer. What uber is doing is using a
different gateway to take money and different country bank to settle the same.

Also the requirement of 2 factor authentication is there for all CNP (Card not
present) transaction, you need to understand that the number of fraud which is
detected due to international transaction is rising and it becomes very
difficult for individuals to process the chargeback. I was victim of card
theft used to do international transaction on some random site.

I like this decision, and Uber can use a card reader on the device like Square
in India or Pre paid wallet.

~~~
th3iedkid
>> all RBI wants is the service provider to settle money in India if paid by
Indian customer to an Indian Customer

And it should be that way.Why should a local payment be routed outside and
after an Ed'Snowden episode , i would rather feel more secure with things kept
simple.

India like most countries has its own homegrown payment networks and i don't
think it would be very difficult to run such businesses in India.

------
neilsharma
The numbers here are highly questionable:

1\. 3-wheeler "autos" are ubiquitous. Wait times are essentially zero, they
are cheaper than taxis, and payment takes maybe a minute at most because the
driver is willing to negotiate.

2\. Most people still book cars by phone because the vast majority of Indians
don't have access to smartphones or internet all the time.

3\. Credit Card penetration is tiny (I believe ~5-10%, but might be wrong).
Cash is, and will be, the dominant form of payment processing for a long time.

I'm not commenting on whether or not Uber should be in India. Just their
departure isn't as detrimental to the GDP as this post claims.

~~~
manojlds
Chennaiite here - finding autos is very tough. They ask for exorbitant fares,
and don't ply to any route that you want. I have literally spent 20 mins on
road trying to find an auto to travel to my destination 3kms away

Uber is not targeted at "most" people.

------
goatcurious
One can argue for payment reforms in India. But Uber, by knowingly ignoring
the norms, had gained an unfair advantage over local services (Olacabs,
Taxiforsure, Meru, etc). This levels the playing field.

------
radmuzom
Well, the news that Uber is shutting down in India made my day even though I
expect them to be back. I have read multiple comments here in Hacker News that
what Uber does is either illegal, or borderline legal, and what I have read
about the company suggests they are unethical too. Here in India, we believe
in the power of the government and strong government regulation. Putting
locals out of business using investor money and then becoming an effective
monopoly will not work here - thank you RBI.

(I am going to lose a lot of karma for this post, but sometimes the right
thing needs to be said)

~~~
e15ctr0n
What is completely illegal in many parts of the world, is 'disruptive' in
Silicon Valley. See the recent discussion on BackPack, an international
smuggling ring backed by YC.
[https://news.ycombinator.com/item?id=8199286](https://news.ycombinator.com/item?id=8199286)

------
misterbishop
Why not support a common online/mobile billing system for regular cabs?

~~~
fleitz
Hmm... interesting idea, I have a feeling this startup may have the technology
you're looking for.

[http://www.moneyfactory.gov/](http://www.moneyfactory.gov/)

------
LeicaLatte
India having bad writers is even more unwise IMO

------
innovesque
Is there a local competitor in India?

~~~
gauravgupta
Not a direct competitor, but Ola Cabs comes close.

------
dang
Url changed from [http://qz.com/254495/why-shutting-uber-down-is-poor-
regulati...](http://qz.com/254495/why-shutting-uber-down-is-poor-regulation-
by-indias-central-bank/), which points to this.

~~~
simonw
It looks like it should actually point to
[http://ajayshahblog.blogspot.com/2014/08/shutting-down-
uber-...](http://ajayshahblog.blogspot.com/2014/08/shutting-down-uber-in-
india-was-unwise.html)

~~~
dang
Thanks. Fixed.

