Ola, the ride-hailing service battling Uber in India, is introducing credit services to its users as it moves closer to a major new funding round.
Today the company took the wraps off Ola Money Postpaid, a service that builds on Ola’s existing payment service — which can be used to pay rides and also third-party services — but offering a credit facility without additional charges. Essentially, the postpaid service lets passengers accumulate rides on Ola and then pay for 15 days of charges in one go, in the same way that we pay for electricity or a phone bill once a month.
Ola said it trialed the service with 10 percent of its 150 million users and saw a 90 percent repeat rate from those early users. With testing over, it plans to roll out the service to all users over “the coming months.” While doing that, it said it will increase the billing cycle to 30 days — so you pay for a month of Ola — and bring support for the postpaid service to third-parties.
The latter makes sense as it may boost Ola Money, Ola’s payment service that was given a standalone app in 2015 with a view to being used to pay bills, food and more. Ola hasn’t said much about the service, and we don’t know how well it fares against competitors like Paytm, Flipkart’s PhonePe or Google Pay, formerly known as Tez.
More broadly, Ola Money Postpaid looks to be an effort to wean users off cash payments. Cash is still a popular medium in India — to the point that Uber, the great advocate of seamless paying, added it a few years ago — and Ola Money has helped get some users into cashless, but not all have done so. The postpaid service, then, appears to be a compromise between the two.
The key quote from Ola is this one from Nitin Gupta, who is CEO of Ola Financial Services:
“Ola is dedicated to supporting the Government’s vision of a cashless economy and we are committed to being a major force in India’s rapidly growing digital payments market. We will continue to invest in innovative solutions that promote the digital economy across India while extending the benefits of this first of its kind Postpaid offering to more Indians,” he said.
Ola is in the midst of raising a new round that’s likely to be in excess of $1 billion, sources have told TechCrunch, and already investors are contributing. Last week, regulatory filings showed that existing investor Steadview Capital injected $75 million toward the round in a deal that values Ola at around $6 billion. SoftBank, Temasek and others are expected to join.
The company operates across more than 100 locations in India, and its services include ride-hailing, payments and food deliveries. Ola recently invested in an electric scooter startup, and it branched overseas with launches in Australia, New Zealand and the U.K. last year.