Auto Drivers to Keep 100% of Fares as Uber Adopts Subscription Model

In a significant shift, Uber has announced that auto-rickshaw drivers in India will now retain 100% of the fares earned through its platform. The ride-hailing giant has moved away from its traditional commission-based model to a subscription-based system for auto-rickshaw services.

“Uber will not charge any commission on your auto trip. Whatever fare you pay goes entirely to the driver,” the company stated in a blog post on February 18. Instead of taking a cut from each ride, Uber will now charge auto-rickshaw drivers a fixed subscription fee for using its platform.

This change aligns Uber with its local competitors, such as Rapido and Namma Yatri, which have already adopted similar subscription models. “Given the industry’s shift towards a subscription-based model for drivers, we have decided to align our approach accordingly so as not to be at a competitive disadvantage,” an Uber spokesperson told indianexpress.com.

Previously, Uber took a 10-15% commission from auto-rickshaw drivers. With this new policy rolling out nationwide, what does it mean for riders who frequently book auto-rickshaws through Uber? How are fares determined, and what payment options are available? Let’s break it down.

What’s Changing for Uber Users?
Uber clarified that its role is now limited to connecting riders with nearby auto-rickshaw drivers. The company emphasized that the service itself is independent of Uber, as it merely provides the platform.

“Drivers operate independently, and Uber’s role is limited to connecting riders with drivers,” the company explained. “We’re not involved in fare-related disputes between riders and drivers, but we’re here for safety concerns,” it added.

If riders encounter safety issues during an auto-rickshaw trip, they are encouraged to report the incident through the Uber app. “…our team will review the incident promptly,” Uber assured.

Shaik Salauddin, the national general secretary of the Indian Federation of App-based Transport Workers (IFAT), refrained from commenting directly on Uber’s policy change. However, IFAT’s statement to indianexpress.com highlighted past criticisms:
“In the past, Mr. Salauddin has criticised Uber for compromising legal and ethical standards to gain market share, highlighting concerns over driver safety and fair compensation. He has urged both the government and companies to take responsibility for the welfare of drivers and to implement robust safety measures.”

IFAT also stated that it would closely monitor the implementation of Uber’s new model to evaluate its impact on drivers’ earnings and working conditions.

Who Decides the Fare?
Under the new system, Uber will only suggest a fare, but the final amount will be determined through mutual agreement between the rider and the driver.

“Since drivers understand local conditions best, we recommend discussing any concerns directly with them,” Uber advised. The company also confirmed that it will not impose cancellation charges if a rider decides to back out of an auto-rickshaw ride.

The high commissions charged by ride-hailing platforms like Ola and Uber have long been a point of contention for drivers, sparking protests in recent years. This tension has led to the rise of alternatives such as Namma Yatri, which operates on the government-backed Open Network for Digital Commerce (ONDC).

Several state governments have stepped in to regulate app-based cab and auto-rickshaw aggregators. For instance, the Karnataka government banned dynamic pricing and mandated uniform fares for app-based cabs and city taxis. Similarly, the Maharashtra government proposed capping surge pricing and cancellation charges for ride-hailing services.

Meanwhile, Delhi’s cab aggregator policy requires platforms like Ola and Uber to register and obtain licenses to operate in the capital. These varying regulations across states pose challenges for companies like Uber.

How Should Riders Pay?
With the new policy, payments for auto-rickshaw rides will be made directly to the driver. In-app transactions, including digital payment methods like credit/debit cards and UPI, will no longer be available for auto-rickshaw trips.

Uber credits, promotions, and coupons will also not apply to auto-rickshaw rides. Riders will need to remove any applied coupons before booking a trip. Additionally, Uber clarified that it will not collect GST from either riders or drivers for auto-rickshaw trips, meaning the suggested fare likely excludes taxes.

“Uber does not provide tax invoices for auto trips. However, you can use the receipt for the suggested fare from Uber for reimbursement if needed,” the company stated.

Last year, ride-hailing platforms, including Uber, reportedly sought clarity from government authorities regarding their tax liabilities. This followed the Karnataka government’s decision to exempt Namma Yatri from paying GST, citing that platforms merely connecting service providers with customers do not constitute a supply or service.

As Uber transitions to this new model, both riders and drivers will need to adapt to the changes, balancing convenience, safety, and fair compensation in the evolving ride-hailing landscape.