Real crunch from Saudi Arabia's oil outage has yet to be felt    Tunisia's toppled ruler Ben Ali dies in Jeddah, body to be transferred to Mecca    BREAKING: Hossam El-Badry appointed as Egypt coach    Sisi Oks additional loan to fund Egypt's largest drainage system    Allianz Egypt allots $399K to promote UNICEF's vulnerable children initiative    Iran's foreign minister warns of 'all-out war' if hit for Saudi attack    'EFA have to first talk with Masry before national team duty,' says candidate coach Ihab Galal    Israel's Netanyahu calls on rival Gantz to form unity government with him    Bullet point previews of Premier League matches    US orders ‘substantial increase' of Iran sanctions    Felix Brych to referee Ahly-Zamalek Super Cup game in Egypt's Alexandria    Taliban suicide bomb in southern Afghanistan claims 20 more lives as election nears    US Fed cuts interest rates for second time since 2008, amid “uncertainties”    Google lining up to open new office in Cairo soon – official    Sudanese PM Hamdok flies to Egypt for talks    Trump bars California from setting stricter fuel standards    Danone Nations, DECATHLON launch series of initiatives, creating change    World at risk of pandemics that could kill millions    Mint, menthol e-cigarette liquids high in cancer-causing compound    Perils of gender and geography hamper global development    Saudi Arabia says full production restored within the month    'Egypt will not allow any country to impose its will on another in Ethiopian dam issue,' FM says    Egypt's new listing amendments mandate more women on boards    Egypt, Ethiopia at odds as talks over Blue Nile dam resume    5 plant-based soup recipes to warm your body and soul    Egypt's Ahly to train for Super Cup game against Zamalek immediately    Egypt says GERD talks with Ethiopia 'stumbled', next round in Khartoum in October    Tutankhamun Opera to debut with inauguration of Grand Egyptian Museum: Zahi Hawass    Egypt court sentence 6 to death for joining terrorist group, manufacturing explosives; 8 acquitted    'Al-Daheeh' host Ahmed El-Ghandour shortlisted for IBC's first 'Young Pioneer' award    Egypt's Sisi discusses education, terrorism at national youth conference    Sisi to open 8th edition of the National Youth Conference Saturday    Spotify buys music production marketplace SoundBetter    Egypt's PM discusses details of Al-Hussein Mosque renovation    Egypt's Baron Empain Palace to be reopen after renovation    Court sentences six to death, 41 to lifetime imprisonment violence related case    Trump says he would release Mideast peace plan after Israeli elections    NBE announces EGP 2.5m prizes for handball youth teams for their world achievements    ACWA Power compares 3 bids to supply production units for Luxor power station    What do you know about gold alloying?    Jennifer Lopez evokes Egyptian outrage post her North Coast performance    Cairo's historic Tahrir square to be renovated – PM    Al-Sisi honours Egypt's scholars on Science Day    IS claims responsibility for suicide bombing killing 63 in Afghan wedding    Political parties gear up for parliamentary, senate, local elections    Unprecedented Glory: Egypt win Men's U-19 World Handball Championship    12th National Egyptian Theatre Festival fuel up public theatre art scene    Ministry of Environment has a plan for "black clouds season"    

Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.

Uber says customers paid over $6 billion in cash last year
Published in Amwal Al Ghad on 17 - 08 - 2019

Uber Technologies Inc. tends to say its "leading technology" "sets the world in motion," yet in some areas of the world, hailing rides and ordering food requires an old-fashioned payment approach: cash.
Uber allows consumers – in certain locations, including India, Brazil, and Mexico, as well as other countries in Latin America, Europe, the Middle East, and Africa – to pay cash for the entire fare for rides or meal deliveries. This includes its service fee from ride-sharing and meal delivery. According to filings with the Securities and Exchange Commission, cash-paid trips accounted for nearly 13 percent of Uber's global gross bookings of $49.8 billion, which would be about $6.5 billion in cash payments.
Accepting cash contradicts some of Uber's biggest selling points for consumers and the company — the safety and convenience of paying via credit/debit card, and collecting payments on behalf of drivers who don't have to handle cash. Uber has to carry out expensive systems for drivers to collect and deposit cash and the company to collect, deposit and properly account for the cash received.
When it sets those policies, they are not always "effective, convenient, or widely adopted by drivers," Uber admitted in its prospectus.
Operating a business that allows cash payments also raises additional legal and regulatory compliance risks, such as concerns about potential money laundering. And in locations where violent crime and tax avoidance is rampant, Uber may never see the cash at all.
Uber's latest quarterly filing with the Securities and Exchange Commission includes a "Risk Factor" devoted to the cash business, and there are several mentions of the scope and risks of accepting cash in the prospectus for its May initial public offering. The latest filing followed Uber's earnings report last week, which disclosed a larger than expected $5.24 billion second-quarter loss and sent shares down 12 percent in response.
Uber says in the most recent filings that its business is "substantially dependent on operations outside the United States." The risks associated with operating outside the U.S. include the challenge of managing operations in locations where passengers and food delivery customers prefer cash over credit or debit cards. Uber said that in certain jurisdictions such as Brazil, "serious safety incidents resulting in robberies and violent, fatal attacks on Drivers while using our platform have been reported."
A regulatory compliance executive for a large Brazilian exchange-listed company, who prefers to remain anonymous to maintain access to the Uber service, told MarketWatch, "It is likely that Uber drivers prefer cash if they pick up and drop off passengers in areas outside of São Paulo and Rio, for example, in neighborhoods that are controlled by criminal gangs. In those locations, drivers likely have to pay bribes in cash to the gangs in order to operate."
Brazilian daily newspaper Folha de São Paulo reported in June that police in Rio de Janeiro were investigating the relationship between militias in a favela called Rio das Pedras and a transportation app created for exclusive use in favelas. The police are investigating if those responsible for the app have links with the gang that controls the neighborhood. When a potential passenger asks for Uber in the neighborhood, they get a message that the service is not available.
Uber told Folha, "To increase the safety of partner drivers and users, our app can prevent travel requests from areas with public safety challenges at specific time on specific days."
Some of these non-U.S. countries also have regulations governing the control of local currencies, and that can affect Uber's ability to collect passenger fares on behalf of drivers and remit that cash to drivers in the same currencies. The compliance executive told MarketWatch, "Cash also makes it easier for both Uber and the drivers to avoid taxes, if they wish."
Uber said that to collect its service fee from drivers and delivery persons that accept cash, it has to offset the fee against any amounts due to drivers, including and driver incentives. Unfortunately, the company admits on its S-1 that it has limited means to collect its service fee for cash trips, and cannot control whether drivers will generate future earnings they can offset to collect a service fee.
Collecting fees as an offset to driver earnings is even more challenging when the driver is owed more than what has been charged to consumers. In certain markets, Uber says it "decouples" pricing to customers and drivers. In those locations, where people travel long distances to school and work and traffic is terrible, drivers are paid based on their time and distance traveled compared with consumer pricing which is fixed upfront based on the estimated trip time and distance from origin to destination as well as demand patterns for that route at that time.
An Uber spokesman would not comment beyond what was disclosed in the company's filings, including answering the question of whether Brazil is one of the markets where drivers are paid on actual time and distance traveled.
For accounting purposes, Uber says it does not recognize uncollected service fees for cash trips in its consolidated financial statements until they are actually collected. Tom Selling, a professor emeritus of the Thunderbird School of Global Management and author of the Accounting Onion blog, told MarketWatch that "Uber's policy to delay revenue recognition until cash collection seems appropriate and in accordance with U.S. GAAP.
"But that does make it more critical for Uber to comply with disclosures explaining material trends in the cash flows from its Brazilian operations," he added. "For example, it is likely that cash collections from drivers vary materially over time. The rates of variable consideration drivers are entitled to might also lead to fluctuating profit margins for Uber."
Uber does not disclose a "take rate" specifically for Brazil, that is, what percentage its Brazilian "core platform adjusted revenue" is of its Brazil core platform gross bookings. Uber reported in IPO filings that 24 percent of its ride-sharing gross bookings in 2018 came from five metropolitan areas – Los Angeles, New York City, and the San Francisco Bay Area in the U.S.; London in the United Kingdom; and São Paulo in Brazil." Uber reported revenue of $959 million or 8.5 percent of total revenue from Brazil in 2018, the only non-U.S. country where revenue was broken out in the S-1.
Uber defines gross bookings as the total dollar value, including taxes, tolls, and fees, of passenger rides, Uber Eats meal deliveries, and amounts paid by shippers for Uber Freight shipments, without adjustment for consumer discounts and refunds, driver and restaurant earnings, and driver incentives. Gross bookings also do not include driver tips.
Source: MarketWatch

Clic here to read the story from its source.