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Even though 2016 is just two weeks old, the world’s sexiest startup Uber seems to be sweating already in Nigeria. A few days after Christmas, Uber increased its price in Lagos and now the company is reportedly testing its cash payment option that may make Nigeria the seventh country in the world where Uber is accepting cash.
Uber prides itself as a service that does not require users to pull out their wallet and this has been largely (and profitably) accepted in many countries of the world. Elsewhere though, there is still a high reluctance among targeted Uber users to put up their credit card details. Such cities include Hyderabad in India which last May became the first city where Uber is accepting cash followed by 21 other Indian cities where Uber is operating.
The cash payment feature has also been extended to Bandung, Indonesia and Manila, Philippines. In Africa, Uber has tested and rolled out the feature in Kenya’s capital city of Nairobi and Nigeria’s commercial capital city of Lagos is set to be next as the company is testing the feature with some of its users.
During the test period, some Uber users in Lagos will see an in-app cash payment option. When this is selected, the driver will be notified at the beginning of the trip and when it ends to collect the cash payment.
Uber had not revealed that the reluctance of many Nigerians to put their card details on its platform to allow them to access the company’s cashless services was a big issue. In fact, last year at an interactive session with Ventureburn and others, the head of the company’s operations in Nigeria, Ebi Atawodi affirmed the company was recording exponential growth in Nigeria in terms of number of drivers and riders that are using the service.
She also expressed confidence in the level of advancement of the payment system of Nigerian banks which she said is more advanced than those of other emerging markets.
“Lagos is surprising the world, payments are going through in Lagos and Nigerian banks are moved ahead of their counterparts in other emerging markets. They deserve to be commended,” she said.
These and other issues make many tech industry watchers in Nigeria to wonder why Uber is now considering to add the cash payment feature to boost its operations in Lagos. Many reasons come to mind.
The first and obvious one is the desire to attract more people to use Uber in Lagos.
The launch of Uber in Lagos, many believe, crippled the activities of Easy Taxi and Afrocab, yet many Lagos residents are not using Uber. It is also safe to say that more people use other forms of car hire services than Uber. This category of people, to a large extent, are those that Uber will be going after with this new cash payment feature. Even though Uber is not making its Lagos figures public (yet), it is safe to say that it is going to want more users.
Another reason for this action could be Uber finally succumbing to the growing request for the addition of the cashless payment option. Trust is still a very big issue in Nigeria’s tech space – so big it is limiting the growth of many sectors including ecommerce and this could be traced to those days when Nigeria was notorious for online fraud and the government appeared helpless – technologically, legally and policy-wise – to combat cybercrimes forcing individuals to be the ones taking responsibility for their cyber safety. Armed with this information, Uber may now be letting its users in Nigeria to know that it empathizes with them and would want them to still use its service even if it means reneging its founding objective to make its rides cashless.
A clearer explanation of the cash payment moves by Uber was given by the company’s spokesperson that spoke to CNN on this subject.
“We know that cash is still the dominant payment option for millions around the world, especially in emerging markets and smaller cities. These ‘cash’ experiments are really exciting for us, given the success we’ve seen in these test markets and the potential that exists to take this even further into more cities around the world,” the spokesperson said.
If Uber finally decides to fully introduce cash payments in Nigeria, it would have to contend with new challenges such as riders not having sufficient cash for the trip.
It is fair to say that not everyone can afford to use Uber in Lagos – including those that think they can afford it. Will they now be allowed to give the amount they have on them and use their card details to pay the rest? Would this not upset the Uber app dynamics?
What happens when a rider pays with fake currency notes? Will the riders be equipped with tools to easily detect the security features on Nigeria’s currency notes? What of currency notes in bad conditions, will the drivers be collecting such?
Furthermore, giving cash to drivers may tempt such drivers to spend part of the money; it could also pose significant risk to the safety of such drivers since no thief is currently after Uber drivers because they don’t collect cash. But when they finally begin to collect cash, how will Uber ensure they are not robbed while in Lagos traffic or by thieves posing as Uber riders?