A perspective on Cashless Transactions

August 23, 2014 at 2:53 pm

Dear Friends,

We are the pioneer and market leader of the Radio Cab business in India and we take pride in creating this Industry which serves millions of consumers and which is growing at such a rapid rate.

Let me take a moment and explain our position about payment modalities which have created a bit of a stir:
Meru was the very first organization in this space to believe that Technology & Cashless transactions will be the way forward and the service of in-cab card payment was launched as early as October 2009.

In fact, till date no other national player currently provides this service. We invested heavily in technology and set up a credit card facility in each vehicle. The fare from the meter was captured by the Mobile Data Terminal (MDT) and the card swiping facility in the car picked up fare directly from the MDT so that no manual punching of the amount was required. The amount was charged to consumer and auto-credited to chauffeur’s account instantly. From 2009 onwards, RBI started putting various checks and processes in place to protect the Indian consumer from fraud, like in many other South East Asian economies. This was very much need of the hour as the industry was at a nascent stage and tight controls were required.

Providing our consumer with a seamless hassle free experience has always been of paramount importance and so we launched the Meru Mobile App with inbuilt payment facility in 2013 following complete RBI guidelines of Two Factor Authorization (2FA), which obviously is not so good experience for the consumer, who has to input the CVV number, and then 3Dsecure password at the end of the journey. This makes the process cumbersome and prone to failures due to multiple communications.

International operators circumvented this 2FA even though RBI had made it amply clear that by merely having a payment gateway abroad does not allow anyone to do away with additional factor of authentication. In the process, they not only violated the RBI’s guidelines on 2FA but also violated the FEMA rules. Also they were exposing the passenger credit card to fraud risk. Even though we were completely ready a long time ago with mobile app that doesn’t require 2FA, we decided not to launch it. So this is not about technology – It is simply about following the laws of the land.

We welcome RBI’s circular to protect the consumer from fraud possibilities and create a level playing field between domestic and international companies. However, providing a smooth consumer experience has been paramount objective for us and we believe mobile payments have to become much more hassle free for it to be popular in a big way. We would like to collaborate with other companies in the industry and continue to have a dialog with regulatory institutes like RBI to improve the payment experience without compromising the safety norms of using the cards online. For example, RBI may come up with a guideline that no additional factor of authentication would be required for transactions below Rs. 2000 and up to a max of 3 transactions in a day. However we will continue to comply with the law until this change happens.

Some people would want you to believe, this is stifling technology led innovation. Technology led innovation is in the DNA of our company. We pioneered many such innovations for past 7 years, like fully automated GPS GPRS based dispatch system, automated speed alarms in cabs, trip tracker service and ICE alert in mobile apps that improves the safety for women passengers and industry’s most advanced forecasting algorithm that provides 99.7% reliability for advance bookings. As the leader and pioneer of the industry in India, it is our goal to constantly look at providing better consumer experience.

Other leaders in the e-commerce space also face such regulatory mismatches, which affects their business. Parity is paramount. I am sure that the regulatory system in India is very robust and fair. We are voicing our concerns to ensure that no consumer is exposed to credit card fraud and seeking parity for the whole e-commerce retail industry.

I thank all our consumers who have stood by us and believed in us. I would love to hear your thoughts at siddhartha dot pahwa at merucabs dot com.

Siddhartha Pahwa

Chief Executive Officer

Meru Cabs