After surge pricing row, Uber moves to make fares transparent

After getting embroiled in the controversy around surge-pricing, taxi hailing app Uber is launching a feature that will allow users to pay upfront. However, it is not clear if surge pricing will still be there.

"Uber has done away with surge multiples like 2X, 3X, etc. While surge will continue to remain a component of pricing during periods of peak demand, the fare will be shown upfront. No more pop-up screens that ask riders to manually enter surge multiple," the company said.

The San Francisco-based firm today said they have introduced a new feature "upfront fare" in six cities in the US and a similar number in India on a pilot basis and will roll out it out in other countries soon. In India upfront fares is in a pilot run for select riders in Mumbai, Delhi, Hyderabad, Chennai and Kolkata.

In a blog post, Uber said the company is doing away with estimated fares and is making rides easier and convenient for its users.

"Imagine buying an airline ticket without knowing the full fare until the end of your trip. Or booking a hotel room online and being told that the real price would be 1.3X. Yes, that sounds odd — but it’s what happens with many Uber trips today," read a blog post from Uber.

Uber, which is battling it out with domestic ride app Ola in India, besides facing regulatory hurdles, especially in Karnataka, has worked out a solution where users know what and how much they are paying upfront.

The company said it drew inspiration from its ride-sharing feature UberPool, launched in the US two years ago, that witnessed far better growth and demand as it allowed users to pay upfront for a ride. The feature currently accounts for 20 per cent of the total rides globally and in India, where it was launched last October, it is growing faster than expected. A Uber spokesperson told BusinessLine that UberPool accounts for 25 per cent of the total rides coming in from just a few cities.

In UberPool riders need to enter their destinations and Uber matches them with other people headed the same way, thus, allowing it to calculate the actual fare in advance and show it to riders before they book their rides.

"To counter Uber, Ola had also introduced OlaShare and it will be interesting to see if Ola will also introduce upfront fares," said an industry expert.

Upfront fares are calculated using the expected time and distance of the trip and local traffic, as well as how many riders and nearby drivers are using Uber at that moment. And when fares go up due to increased demand, instead of surge lightning bolts and pop-up screens, riders are given the actual fare before they request their ride.

"There’s no complicated math and no surprises: passengers can just sit back and enjoy the ride," the blog added.

While it is a good news for riders, it is not clear whether the move will benefit drivers too and how their incentives will be calculated.