Why Uber’s stubbornness on in-app tipping will cost them in battle with Lyft

Things are getting awkward between riders and drivers in California and Massachusetts. After a recent court settlement, Uber is now allowing drivers in those states to use signs in their cars to solicit cash tips from passengers.

So when your driver turns around and smiles at the end of your ride, that’s now not always just a friendly goodbye. Though they believe it’s just the opposite, Uber’s message to passengers is clear: Carry cash or risk your rider star rating taking a dip.

Lyft has had the perfect solution since the beginning: Allow passengers the option to tip in-app at the end of a ride. The driver doesn’t know what tips he received on each ride until the next day’s driver summary, so all he/she can do is smile and assume you just tipped him/her $5 in the app. Even when a driver does see the driver summary of his/her tips the next day, it’s mostly anonymous since the only info provided is the ride time, distance and money earned. If you don’t want to tip, you can make that choice freely without your driver ever knowing.

Another big reason Uber is being foolish on this matter is the huge amount of business travelers who use Uber/Lyft to do most of their traveling around town. The option to tip in app using their company credit cards is seamless and easy. Having to use cash is awkward and nearly impossible to expense. Some riders will move over to Lyft as a result.

Finally, many people just don’t carry cash anymore. We want to earn rewards points on every single dollar we let flutter out of our wallets and into the world.

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Forgot to bring cash and have a “Please tip” sign in your face? Things could be getting awk.

Uber will eventually fold and add the in-app tipping feature, but for now they’re holding their ground.

Whether you should tip your driver is a completely different issue.

Should I tip my Uber/Lyft driver?

I always tip my drivers if they provide me a good product at a cheap price, which is usually the case in Uber/Lyft rides I’ve taken. It drives me insane that I can’t tip my Uber drivers in the app and also earn two Chase Ultimate Rewards points per dollar using my Chase Sapphire Preferred card.

As a former part-time driver, there are a few things I wish passengers would consider when deciding whether they should tip:

Was the service better than the average ride? Would I appreciate a tip were I in my driver’s shoes? How far did the driver have to drive (for free) to pick me up? Is the amount I’m paying really enough to fairly compensate this person for their time and effort?

For example, if a driver drives 4 miles to pick you up and take you 2 miles, they likely netted only a couple of dollars for those 6 driven miles. This would be an ideal situation in which to tip. Is your ride a 2x surge price ride? If so, your driver is getting a more fair net earning, so this may be a situation where a tip isn’t needed.

Here’s an example of an UberPool ride I gave last year from the San Francisco airport into the city:

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This was the more lucrative of two passenger rides in this Pool. Including gas, oil, and mileage costs, this ride came out to about minimum wage. I enjoy driving, so I’m not complaining. But maybe just consider whether you think your time is worth more than minimum wage. If it is, it might be possible that your driver’s time is worth more as well.

I’d love to hear your thoughts, so please comment below. Happy travels!

9 thoughts on “Why Uber’s stubbornness on in-app tipping will cost them in battle with Lyft

  1. Wow. Your example showed you earned $8.88 for an hour of work but that probably didn’t cover the gas and wear and tear and your car. And to take 55 minutes to travel 16 miles shows it is a terrible drive in rush hour traffic. Shame on you if you didn’t tip that driver at least $10.

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    • Hey Art, thanks for the comment. No, I didn’t receive a tip on this ride. Though there was one other ride in this Pool, so my net was around $13 before considering gas, etc. To be fair, this was probably my worst income on a ride from the airport. The Pool rides just aren’t worth it for drivers usually.

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