Uber is viewed as one of the forerunners in electronic payments, combining service and technology in a way that benefits consumers. Since its inception, the ride-sharing company has touted its mobile-based payment method as convenient and hassle free, simplifying the process for both drivers and passengers. This simplicity is what made Uber so successful in Western markets.
However, it seems the service recognized their mobile-based payment method isn’t suitable for every region across the globe. In fact, Uber began testing a different – although not exactly new – method of payment in Hyderabad, India, in May 2015, TechCrunch reported. The Southeast Asian city is home to nearly 8 million people, and the majority of those citizens prefer paying with cash.
The new program proved beneficial for Uber, and it expanded its cash payment services across all of Southeast Asia – except for Singapore and Malaysia – in early February. The company didn’t stop there, however. Passengers in the Middle East, Kenya, Nigeria and Peru can now also pay with cash instead of electronically.
Consumers have different payment preferences
One may wonder why such an innovative company appears to be backtracking on the major factor responsible for its success. Mobile payment methods built Uber, and adopting cash payments in the era of mobile wallets may seem archaic. As implied, the choice came down to accommodating customer preferences.
According to TechCrunch, the number of consumers with a credit card in most emerging markets is less than 10 percent. This means approximately 7.2 million people in Hyderabad wouldn’t have been able to use Uber, as the service requires riders to link their credit or debit cards to the app. The company realized it had to make some accommodations in order to expand its consumer base.
” … What I can say is that we recognize that not everyone uses a credit card and there are different payment mechanisms in different places,” Mike Brown, Uber’s regional general manager in Southeast Asia, said in a conversation with The Next Web a year before the cash program launched. “We want to be able to serve everyone so, fundamentally, everyone needs to accommodate to our system or we need to accommodate how riders in other markets pay.”
Choosing the second option was clearly the way to go, and other companies should adopt Uber’s methods if they plan to expand in foreign countries. Offering multiple payment options allows companies to access markets across the globe, especially those deemed hard to reach.
Companies should research prospective customers to discern their unique preferences. For instance, debit cards are used in 35 percent of e-commerce transactions within the U.K., Entrepreneur said. The French, however, use cards 85 percent of the time when shopping online. Understanding these differences helps companies develop better marketing campaigns and localized websites.
Meanwhile, shoppers in Argentina, Colombia, Mexico and Peru tend to abandon their online shopping carts due to security concerns, the website said. Businesses marketing to these areas should stress their dedication to protecting cardholder data.
Companies providing several payment options have a better chance at reaching diverse customers. E-commerce retailers should follow Uber’s example and understand consumer preferences.
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