The use of digital money in Africa is still relatively low. Even in Kenya, which is seen as a model in the adoption of financial technology, about 90 percent of retail transactions in some parts of the country remains cash based. This was definitely going to be a problem for Uber, the popular taxi hailing service which started with payment via credit or debit cards. Seeing this situation may be a stumbling block to its expansion in developing countries and emerging markets, Uber now accepts cash.
Its cash payments test started in Hyderabad, India in May. It worked fine and had since expanded to other cities, including Nairobi, Kenya’s capital city. Now, Uber has introduced the cash payment option in Lagos, the commercial nerve of Nigeria, Africa’s largest economy.
“This is an experiment and only the eighth place in the world where cash payment is available across the 364+ cities where Uber is available,” a blog post by Uber says. “We have worked hard to create a seamless option that is truly Uber. The insight and feedback we get from your use is what will make this a successful test.”
“Lagos, you asked and we listened,” the company also wrote. Lagosians are forward-thinking, tech-loving people but their preference for card payments have been regretted in recent times as commercial banks in the country charge dollar payments on Naira denominated accounts at parallel market rates. The naira has lost much of its value over the past six months falling to N305 to a dollar on Wednesday despite official rate remaining at N199. Therefore, when payments are made to international companies like Uber, users end up paying more. This explains why more people are yearning for the cash payment option.
The American company noted that the interest in its service in Lagos has been amazing, hence its excitement to experiment with cash payments. “Uber riders in Lagos already have access to a reliable, convenient and safe transportation so paying by cash means even more people can enjoy this,” the post says, meaning Uber knows it has been missing out by not accepting cash payments.
Gallup’s survey of 11 countries in sub-Saharan Africa found that more than 80 percent of adults in the region have made bill payments or remittances with cash. Cash is still very popular on the continent, therefore, deciding against cash acceptance for payments is same as limiting user base.
There is no doubt Uber’s experiment with cash payments in Lagos will be very successful and acceptance of cash for payments will continue. This is certain to put other taxi-hailing service providers who have cornered the cash payments market on their toes. For users, more competition means better services and competitive pricing.