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Uber solves its India problem with Paytm link-up

Using Paytm's mobile wallet may have put it back in business in the country, but it may have lessened the uniqueness of Uber's service offering when compared to the company's rivals.

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Uber has, in the nick of time, managed to save itself from the ignominy of being shut down by the Reserve Bank of India (RBI). However, how much of a differentiator the ride-sharing service now proves itself to be in comparison to its local rivals such as plain-vanilla taxi companies Meru or Ola Cabs remains to be seen.

The reason that differentiation is important, as I pointed out when I last wrote about Uber in India on ZDNet , is because Uber is regarded as, well, uber-cool compared to its more straightforward taxi brethren, and primarily so for two reasons.

First, your credit card details are wired into Uber's systems so that when you get off after your ride, you can flounce out of the car without having to hand over any cash and pretend for a brief moment that you have your own personal car and driver. Second, you could actually elect to share the car with someone else. While this may not give you the truly elite feeling of being a hotshot corporate don being driven to your next power meeting, sharing can reportedly save you up to 50 percent of the fare of a regular journey — which for a cost-conscious Indian is even better.

As I had written previously, Uber was smugly confident in its system of allowing Indians to use their credit cards to charge their fares automatically — cashless payments that were apparently then routed to a Netherlands-based payments gateway before they were sent to the entity's New York-based bank, after which it would be sent back to the driver's account. Until, of course, the RBI stepped in and reminded the car service provider of two things that essentially put the brakes on its operations: If you're using a credit card in India, you pretty much have to go through a two-step authentication process to thwart fraudsters, where a one-time code is sent to your phone for it to be punched in at the merchant's end of things; and there's also the slightly thornier issue of no two Indians being allowed to engage in a transaction in a foreign currency without explicit permission from the RBI to do so.

So, thanks to shrill complaints by the Indian radio taxi providers, which included competitors Meru Cab, Easy Cabs, and Mega Cab, which were no doubt quaking in their wheels at the thought of the oncoming disruption to their business that the maverick car service provider was ushering in, the Indian government gave Uber an ultimatum of November 30 to figure out another way of conducting business.

So, what Uber has come up with as of a few days ago is a tie-up with local payments firm Paytm's mobile wallet to which users users can link their credit cards, debit cards, or bank accounts. This means that Uber loyalists will have to load their Paytm wallets using the two-step verification system — no getting around that process — in order to bounce in and out of cars with the aplomb of a power broker.

The dilemma for Uber is that all the other taxi services also offer mobile wallet payment systems, so Uber will now have to work extra hard in proving to its customers that its service is still way cooler and more value-added than the rest of the other fish in the sea.