Trust your competitors to bring you down. I would file this under the dirty tricks department.
Uber has been expanding pretty fast around India, and now offers services around ten cities. Cashless transactions and on-demand services are their differentiators, and I love the fact that I don’t have to deal with cash when I get out of the car, and it goes automatically on my credit card.
In India, all credit card transactions are supposed to go through a 2-factor authentication. For offline purchases, this is Chip+PIN (+Signature as well, yet!). For online purchases, this means a One Time Password or Visa/MasterCard online authentication. Uber bypassed it by using a gateway based in the Netherlands. All the homegrown services such as Meru and Ola did not like this, and hence they decided to challenge this with the Reserve Bank of India.
The Reserve Bank of India has closed this loophole now, by insisting that if the card is issued in India, and the service/goods are being provided in India, then the transaction needs to be handled by a bank based in India only. Also, the 2-factor implementation will need to be put in place for transactions in India.
Uber does not have much time on hand, since they are only allowed to keep their current arrangement till end of October 2014. I’m sure they have already been working on a customised arrangement for India, such as their arrangements in the USA with PayPal, and with American Express (which allows instant redemption of Membership Rewards points for rides). Uber anyways needs to implement the ability to charge Debit Cards in India as well, and I’m hoping the innovation company can read the rules up in their favour and continue to be a seamless experience.