Ola formed a digital payments partnership with Bharti Airtel, a global telecommunications services company in India, which is likely to impact drivers who have been defaulting on auto loans in recent months.
Airtel and Ola will bring together their respective platforms and reach to co-create a comprehensive ecosystem to address India’s growing communication and mobility needs, the companies said in a joint statement yesterday.
Specifically, Airtel Payments Banks, a unit of Bharti Airtel, will integrate with the Ola app to offer convenient digital payments solutions to customers for their rides. Meanwhile, Ola Money — a mobile wallet — will be integrated as a digital payment solution within the MyAirtel App and the Airtel website; this will enable users to recharge Airtel prepaid mobile/DTH and payment of Airtel mobile/broadband bills through Ola Money.
But this partnership could have a larger effect for Ola, as the State Bank of India halted originating loans to Ola drivers in Bengaluru last year because nearly one-fifth of those loans were defaulting.
“We stopped giving car loans to drivers in Bengaluru last year,” Rajnish Kumar, managing director at State Bank of India, said in a published report. “However, we remain invested in this segment of loans. We continue to disburse loans in Hyderabad and Chennai after tweaking the underwriting standards.”
Ola, and its rival Uber, both allow drivers to lease or purchase vehicles and make payments on the vehicle with earnings a driver generates through the app. This is made possible through Ola’s and Uber’s respective programs, Ola Fleet Technologies and Uber Xchange Leasing India. Typically, the car payment is deducted by the lender before the rideshare pays the driver, but Ola drivers have a high tendency to demand cash from drivers — as compared to Uber drivers — meaning their loans are not getting paid, according to a report. Other key lenders for rideshare driver loans in India include ICICI Bank, Mahindra Finance, and Tata Motors Finance.
Therefore, Ola has a particular motive to assist riders in easily paying for their rides in order to prevent drivers from collecting cash.
Leasing is an optimal perk for rideshares, as it not only offers an incentive to drivers to join a particular platform, but it also enables the rideshare to keep a driver on their platforms for the duration of the lease. In the case of Uber and Ola within India, both platforms initially flooded the market with drivers by providing extra financial bonuses, but have begun cutting these incentives in order to reduce company overhead. However, with drivers locked into paying back loans, it ensures a steady supply of drivers who cannot easily leave a rideshare platform after the incentives have disappeared.
Ola did not respond for comment by press time.
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