Uber India: No More Commissions, Daily Fees for Rickshaw Drivers

Uber Shifts Auto-Rickshaw Model in India

In response to growing competition from companies like Rapido and Namma Yatri, Uber is altering its fee structure for three-wheeled motorized rickshaw drivers throughout India.

The ride-hailing service will transition from a commission-based system to a daily access fee for drivers utilizing the platform to connect with passengers.

Adapting to the Indian Market

This modification to the business model represents the latest adjustment Uber is making to improve profitability within the Indian market.

Uber initially introduced its auto-rickshaw service in India in 2015, but it was temporarily suspended before being reintroduced in 2018.

Expanding the Subscription Model

It is understood that India is not the sole location where Uber is testing this approach.

A company spokesperson confirmed to TechCrunch that Uber previously launched subscription-based services for bikes and auto-rickshaws in Bangladesh and select Southeast Asian countries.

Implementation and Coverage

The change, communicated to drivers via email, is now active for all auto-rickshaw operators in India, following a period of quiet pilot testing.

Auto rickshaws account for approximately 25% of all motorized transportation trips within India.

Commission vs. Subscription

Traditionally, Uber’s commission charges have ranged from 25% to 40% of each ride’s fare, although the company states its service fee “varies from trip to trip.”

Rapido and Namma Yatri utilize a subscription-based model, avoiding commission fees altogether.

New Daily Fee Structure

Uber is now adopting a similar strategy.

Auto-rickshaw drivers in India will be required to pay a daily fee of between $0.23 and $0.46 (20-40 Indian rupees), dependent on their city of operation.

Payment and Fare Transparency

With the elimination of commissions, passengers will pay drivers directly, either in cash or through the Indian government’s Unified Payments Interface (UPI).

Uber credits and promotional offers will not be applicable to auto-rickshaw rides, and cancellation fees will be waived.

Fare Negotiation and Driver Autonomy

Uber will no longer display the final fare amount to riders at the conclusion of their trip.

Instead, the platform will provide a fare suggestion, allowing drivers to establish their own rates.

Uber explicitly stated that it will not mediate disputes concerning fares between riders and drivers, implying that negotiation will become more prevalent.

Safety and Continued Support

Despite these changes, Uber assures riders that they can still report safety concerns through the app.

Market Specific Strategy

While this model is unlikely to be replicated in markets like the U.S., it aligns with Uber’s core objective of connecting independent contractors with riders.

Limited Scope of Change

This update is currently limited to auto-rickshaws; four-wheeled cabs in India will continue to operate under the existing commission model.

Ongoing Experimentation

Uber is also actively experimenting with various pricing models for traditional ride-hailing services in over a dozen Indian cities, including flexible pricing and concurrent rides.

This is a strategic effort to maintain competitiveness in the world’s most populous nation.

Uber currently faces significant competition from Ola (backed by SoftBank), Rapido (backed by WestBridge Capital and Nexus Venture Partners), Namma Yatri (backed by Google), and numerous independent auto-rickshaw and taxi drivers.