Uber: Innovate By Payment, Getting Beaten Up By Payment

Worried about new age cab competitor Uber, a group of taxi firms in India are trying a creative legal attack on Uber and it all revolves around payments.

The Indian taxi firms—including Meru Cab, Easy Cabs and Mega Cab–have filed a complaint with the Reserve Bank of India, accusing Uber of committing foreign exchange violations, according to The Economic Times. The issue involves how Uber processes payments. The legal complaint argues that Uber charges the fare to passengers in India and then “routes it in foreign currency to The Netherlands-based Uber BV. It later remits 80 percent money to the driver in his Indian account via wire transfer from the US-based Wells Fargo Bank.”

That method of moving money, the Indian taxi firms argue, violates Indian money handling rules. “Collection of fares by Uber on behalf of a taxi driver in India should qualify as a capital account transaction under the Foreign Exchange Management Act (FEMA) and because such a transaction is not specifically permitted under the regulations, it is our understanding that the transaction is in gross contravention of the Indian exchange control regulations,” said a letter sent by the Indian taxi group, according to the Economic Times story.

“The association also alleges that the payment should not be routed through an international payment gateway because Uber is just a facilitator for the transaction between the driver and the customer, who are both Indian citizens and two Indian citizens cannot do business in foreign currency, unless one holds an RBI forex broking license,” the report said. It quoted Vaibhav Parekh, partner at Nishith Desai Associates, who said “if Uber is a commission agent, then there may be a violation because Uber is accepting the full payment in dollars and remitting back in rupees. They should ideally charge only the commission in dollars and the rest in rupees.”

The legal complaint also accused Uber of saving passenger payment card details in its system, which would also be a big PCI no-no if that is happening in the U.S..


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