Why doesn't Ola Auto prefer Ola Money
Why do drivers refuse service while paying with Ola Money?
edit Thanks @DumbCoder for the link to the New Indian Express Articles on Chennai Taxis and Ola Money. In the specific case of Ola, the complaint appears to be a late payment. Although the driver is supposed to be credited within two working days of the transaction, it appears that Ola was not on time and sometimes did not pay her for almost a week.
Overall, independent workers in traditionally cash-based industries often prefer cash to credit cards or alternative payment systems. For example, taxi drivers' resistance to credit cards is a well-known challenge. Delay in payment is just one of several common reasons.
When a taxi driver, hairdresser, waitress, or other employee has provided service to you, giving them cash is an instant reward. You could spend it right away if you wanted - and sometimes you have to.
In contrast, they do not have immediate access to funds transferred through a payment system or credit card. It is cheaper and safer for the processor to "sweep" funds from multiple transactions together than to process them in real time, which means that the employee may not get paid long after the transaction, sometimes days later. Alternatively, as a precaution against fraud, the payment system could put the funds on hold before they are transferred to the employee. Or they reserve the right to reverse the transfer within a certain period of time, or request that a certain balance be kept in the account. Or they hold the funds for cash flow reasons.
To those of us in white-collar jobs who are used to waiting a couple of weeks for our payment, this may not sound so terrible. Keep in mind, however, that wages in these service occupations are far lower, and workers are also paying the labor costs out of their own pocket - the taxi driver will have to buy fuel, the hairdresser may need to buy styling products, and so on. It is a hassle to wait several days for your work to be paid while your expenses remain unchanged.
Also, keep in mind that the employee must get the funds out in a usable form even if the funds are transferred instantly without interruption. The money can be transferred to a bank account, but by 2014 2 billion adults are still lacking a bank account (even in rich countries - there are around 17 million Americans with no bank account). If you have a bank account, you will need to make an extra stop at an ATM or branch to withdraw cash and possibly pay a fee. The corner shop may not accept debit cards, and even balanced it is less likely to accept other alternative payment systems.
It's very common to hear how much taxi drivers hate credit cards - I've seen complaints from both North America and Europe. Depending on local regulations, the cost of installing and maintaining the machines may be borne by the operator. Equally frustrating for them, however, is that the tariffs they are allowed to charge may be regulated, but they are still responsible for paying the credit card processing fees, usually to the owner of the taxi, if not the bank. In 2013, in Boston, those fees were reportedly 5 or 6 percent, and although tariffs increased, rental fees also increased.
Again, I don't know exactly how Ola Money is managed, but a transaction fee is a feature of other alternative payment systems like Venmo or PayPal.
In New York, cab drivers have only been appeased by changing the default "tip" option to 20% with a recommended tip of 30% - double or triple the traditional fare. In other countries it is customary to charge a surcharge for cashless transactions, but this is not the case everywhere.
There is also a risk that the customer could fraudulently report that the transfer was not approved, resulting in the employee not receiving the money at all and possibly freezing their account during an investigation. This is not just a theoretical risk. In the USA cost chargebacks Against credit cards (cases where the consumer denies a charge and forces the bank to refund the money) businesses estimated $ 11.8 billion in 2012, and around 86 percent of chargebacks are considered fraudulent. Friendly fraud is still fraud, but it's worse because the worker - not the fraudster, bank, or app maker - bears all the burden.
Stay "off the books"
Since such jobs are part of the informal sector in many countries, working with cash only makes it easier to avoid notification by the government or other regulatory agencies. In this way, the employee can of course sub-report their income as cash can be physically issued or stored. But it can also help the worker avoid requirements, register with local authorities or obtain a license, or adhere to zone or work restrictions or other requirements, good or bad. I would compare it to taxi drivers in some countries who refuse to turn on their meter or pretend the meter is broken so they can fake costs or mileage.
This incentive tends to be stronger in industrialized countries with their stronger regulatory systems than in industrialized countries. It's no surprise that English has a lot of expressions for working without an official sanction, like working off of books or under the table .
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