Uber’s new model for bikes and auto rickshaws puts fare negotiations and disputes in riders' and drivers' hands

Uber is rolling out a big change for auto-rickshaw drivers in India, dropping its old commission system for a simple daily fee. This shift, reported by TechCrunch, is all about staying competitive with local players like Rapido and Namma Yatri, who don’t take a cut from each ride. Now, drivers will pay Uber between $0.23 and $0.46 a day (which roughly translates to INR 20 – INR 40), depending on their city, to use the app and find riders.

This new setup puts fare negotiations right in the hands of riders and drivers. Instead of Uber setting the price, it will only suggest a fare. After that, riders will pay drivers directly, either with cash or through UPI, India’s popular digital payment system.

That means haggling could become the norm, much like it already is with traditional rickshaws. Uber won’t step into any pricing disputes, and extras like credits, promotions, or cancellation fees won’t apply to these trips. So essentially, it’s more of a win for drivers than riders in the country. But it’s understandable given the position Uber is in at the moment.

Why the change? Auto-rickshaws are a huge deal in India, making up about 25% of motorized trips. Uber used to charge drivers 25% to 40% per ride, which was tough for them to swallow when rivals offered a no-commission deal. By switching to a flat fee, Uber hopes to win over more drivers and keep its edge in a crowded market.

This isn’t the first time Uber has tried this. A company spokesperson told the publication they’ve already rolled out similar subscription models in Bangladesh and parts of Southeast Asia for motorbikes and auto-rickshaws. In India, though, this only applies to auto-rickshaws. Four-wheeler cabs will stick to the old commission system for now.

While it’s unclear if this model will be used in other markets, it shows Uber’s willingness to adapt and experiment. They’re facing tough competition, and this move could be a way to stay competitive. It also puts more control in the hands of the drivers, allowing them to set their own prices. Only time will tell if this new approach will be a success.