RBI’s Two-factor Authentication Affects Business: Uber

Ride sharing app Uber has criticised a Reserve Bank of India (RBI) rule that makes two-factor authentication mandatory for online credit card use. Recently, Uber has changed its payment methods to adhere to RBI norms, but the company feels that the two-factor authentication acts as a barrier in carrying out business in India.

As per the company, "Today, Uber has complied with the RBI August 22, 2014 circular requiring every credit card transaction made with an Indian credit card to include two-factor authentication. While we believe this requirement is unnecessary and burdensome, we have engaged in constructive discussions with the RBI and are committed to working with the Indian government to advance regulations that support innovation and job creation."

"India's regulations require every transaction made with an Indian credit card, no matter how small the amount, to include two-factor authentication,” Uber asserted.

The company has also emphasised that, “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."

If we compare Uber with other taxi services in India, we find that in a bid to carve its own niche, the company follows a different method to run its business. Now, let’s see what it does. Well, Uber doesn't own cars, rather it signs up drivers for the service.

Later, travellers use Uber’s mobile phone app to access the service. The consumers must remember, they are not supposed to pay taxi drivers. The fare is paid through Paytm Wallet. Soon after the RBI issued its guidelines, Uber joined hands with Paytm to introduce new payment system by integrating virtual wallet with credit/debit cards.

The company is currently offering one free ride to its users in order to influence more and more consumers so that they start using the new payment mode.

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