Uber tipping in Australia- a terrible idea?

Uber is to introduce tipping and it’s a terrible idea. Now I know Uber drivers like the idea – especially in the US where a taxi driver regularly will get a 20-30% tip and Uber drivers get nothing. But the tipping approach undermines one of Uber’s best features – predictability and simplicity.

I like Uber (well I like the concept, and I use Uber’s version of it because of their coverage – I’m not a fan of the company per se). One of the main reasons I prefer Uber to a taxi is that at the end of the journey I simply get out and the financial transaction is handled. I detest the end of a taxi journey when the driver stuffs about adding in extras and then putting an amount into the Eftpos machine that bears a vague resemblance to the amount on the meter. That predictability is a huge feature: I know what I’m being charged.

The approach is also simple because I just say goodbye and leave the Uber car. It’s quick and clean wiht no entering your PIN into a dodgy Eftpos while irate drivers behind you sit honking their horns.

Introduce tipping and the transaction requires more fiddling about. Perhaps the tip will be done separately to the actual trip, but that still adds in complexity in areas like deciding on an amount – especially in Australia where the tipping decision is always more complex simply because it is not ubiquitous.

But there’s also the issue that Uber drivers rate passengers. It’s an opaque area that is acknowledged to exist but lack clarity on how it works other than it’s all done on averages rather than specific trips – ie the driver does not see the rating for a specific trip. It’s hard to see how the driver will not see the tip for a specific trip, though, and put in a retaliatory rating if the tip is not deemed acceptable.

None of this is the end of the world. But it’s indicative of the growing pains as Uber transitions from being a cool ride-sharing service to being a basic out-sourced taxi service. The dichotomy of arguing that they are or are not a taxi service for GST and FBT tax laws in Australia is another great example: ‘We’re ride sharing so should not attract GST’, but ‘our business clients should be able to treat us as a taxi and not pay FBT’ is a messy line to take.

Uber works because it has an innovative business model allowing a simpler and more predictable service that the entrenched taxi service. It’ll fail if it chips away at too many of the things that make it work. The company is no longer cool; drivers are having issues; and if you remove simplicity and predictability too there’s a real danger of killing the underlying model.

As a matter of interest, you can see your own rating on Uber by going to their website here.

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