They will actually usually just suggest driving past an ATM so you can get them cash.
A good alternative that usually works is if you suggest paying them with a cheque. Usually then their card reader will magically start working.
They are required by TFL to have a working contactless and Chip'n'Pin device mounted in the customer compartment. I have a feeling we're talking about things that happened in the past.
Uber may not be a perfect regulator, but it's apparently "good enough" and that's what the existing incumbent regulator can't stand - their own efforts to make cab drivers behave appear to be worse than what the private sector can provide.
But hey, what do Londoners expect when they voted in a Labour (left wing) mayor whose first act was to freeze the cost of public transport, thus gutting TfL's budget. Londoners also elected Jeremy Corbyn and Diane Abbott. They don't get to turn around now and complain about excessive regulation killing off businesses they don't like!