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Companies

Uber says cash payments pose risk to its business

An Uber app on a phone display
An Uber app on a phone display. FILE PHOTO | NMG 

US cab hailing company Uber says it considers cash payments a safety and regulatory risk that could potentially expose it to losses and reputational damage.

The tech firm revealed this in a prospectus for its upcoming initial public offering (IPO) where it also states that its business would be adversely affected if drivers using its platform were classified as employees.

“If we do not successfully manage those concerns, we could become subject to adverse regulatory actions and suffer reputational harm or other adverse financial and accounting consequences,” Uber says.

Kenya is among the markets in which the decade-old car-booking firm allows customers to pay the entire fare of rides and cost of meal deliveries via Uber Eats in cash.

The same happens in India, Brazil, and Mexico, as well as certain other countries in Latin America, Europe and Africa. However, in most countries it operates in Europe and its home market of US, payments are usually done via debit or credit card.

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According to Uber’s prospectus, cash-paid trips accounted for only about 13 percent of global gross bookings in 2018 as the firm projects this percentage to increase in the future.

This even as it reckons that use of cash in connection with its technology raises numerous concerns. For instance, it says, many jurisdictions have specific regulations regarding the use of cash for ride-sharing.

“Failure to comply with these regulations could result in the imposition of significant fines and penalties and could result in a regulator requiring that we suspend operations in those jurisdictions,” cautions Uber.

According to the firm, use of cash increases safety risks for drivers and riders including potential robbery, assault, violent or fatal attacks as was seen in Brazil.

The company is aiming to raise $10 billion (Sh1 trillion) from its IPO as it aims to list its shares on the New York Stock Exchange on May 10.

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