The taxi application Uber has announced it will allow Cairo passengers to pay their rides in cash — but with minimum fares rising from LE8 to LE10, riders will be needing a bit more of that cash for their Uber trips.
The company will slowly roll out the cash option in Cairo on a trial basis as the company tests the new payment system, said a Monday press release, and not all Uber users will immediately be given the option.
Of the nearly 350 cities worldwide with Uber service, Cairo is only the seventh in which the company has tested cash payments.
In the same press release, Uber announced it will raise its base fare by LE2 “to better help us manage this change.”
Uber began operating in Cairo in November 2014 and quickly built up a large clientele. The company recently announced plans to expand its service to Alexandria, and says it booked more than 1 million rides in Cairo during its first year.
For Cairo residents, the cash option is an obvious next step, and it could also be an indicator of the company’s plans for the rest of the developing world. In a city of more than 20 million people (and seemingly as many taxis), there’s very limited banking and credit card penetration — by some estimates, only around 10 percent of the Egyptian population participates in the formal banking system. Accepting cash payments could thus open up much of Cairo’s massive transportation market.
Uber says that’s exactly why it chose to experiment with cash payments in Cairo, which they describe as the “ideal environment to test a new payment option.”
The low use of credit cards in Egypt — and the unwillingness among those who have them to share credit card numbers online — is not a new challenge for e-commerce in Egypt. Major online shopping outlets, such as Souq and Jumia, rely almost entirely on cash-on-delivery. Hussein Abdel Karim, a former Jumia employee who led the 2014 launch of Uber-competitor Easy Taxi Egypt, said last year that around 95 percent of Jumia sales relied on cash payments. He predicted the ratio would be similar for transport users.
“Egyptians are very wary of putting credit card numbers online,” says Karim Beltaji of financial start-up Feloosy, and figures estimating online and mobile penetration in Egypt are misleading. While smart phones are widely available in Egypt, only certain applications have wide use, and mobile providers have responded by offering “Facebook-only” plans and other similarly limited data plans.
Beltaji says figures putting online penetration in Egypt between 40 and 50 percent probably better represent Facebook and WhatsApp usage, rather than the average Egyptian’s use of the full web.
Nonetheless, a cash option allows Uber to better compete with conventional taxis and with other taxi-applications already offering cash payment, such as Careem and Easy Taxi.
But the experiment might also introduce certain risks and inconveniences. In December 2014, when asked why Uber was only offering credit card payments and thus limiting itself to Egypt’s banked population, Uber “market launcher” Anthony al-Khoury said, “The idea of Uber is a seamless ride. So it’s reliable and it’s very seamless. You finish your ride, you just get out of the car — it’s your private driver. So we don’t want to break this experience.”
Moving from a fully digital transaction to one involving cash is likely to complicate this “seamless” experience, although riders who wish to pay by credit card will still have the option to do so.
The company also runs the risk of not being able to efficiently meet demand if it successfully opens to a much larger market. Since users can’t book rides in advance, the desired “seamless” experience depends on having a steady supply of available cars around the city.
In a December 2 press release, Uber said it has added 1,000 drivers per month since it launched. If introducing a cash option increases demand, the company would need to confront the challenge of recruiting new drivers at an accelerated pace while still offering good customer service and fast pick-ups.
Uber, one of the major sponsors of this weekend’s RiseUp entrepreneurship conference in downtown Cairo, is still a young company, offering its first ride in 2011. Despite its global success, today’s press release suggests that the service isn’t immune to one of the major challenges affecting the young entrepreneurs who flocked to the summit: managing growth.