Ridesharing Programs 101

Today’s 101 topic is only tangentially related to frequent flyer programs. It’s about ride-sharing services (RSS), such as Uber and Lyft. If you’ve never used one, they may seem intimidating at first, but can save you time and money.

The concept behind RSS is a relatively simple one. Instead of buying or renting a taxi medallion, individuals can sign up with one of the major services to become a driver with their own car. They are paid electronically, with about 25% of their earnings going to the parent company. There are no set work schedules; drivers decide if and when they want to be on the clock.

Uber, the largest of the RSS, was the quintessential industry disruptor, disintermediating the traditional taxi business in a decade. It succeeded by eliminating many of the “pain points” that came with an industry that hadn’t changed in decades. Need a car? No problem, you simply hit a button on your phone. Not sure where your car is, or even if it would show up? The app tracks the car. Dirty cabs that smell bad? Most of the RSS drivers have newer cars. Want to pay with a credit card and move quickly? Your ride is charged automatically. You just step out and go. Tipping? In theory, not required (more on that later) Etc.

The two major RSS are Uber and Lyft, although different geographies also offer local services. Personally, I find the Uber technology, particularly the GPS telling the driver where you are, to be a little better. On the other hand, Lyft drivers tend to be a little friendlier, although many drivers are employed by both. A quick Google search will also give you details on some of the internal cultural issues that Uber has faced.

Things to keep in mind as you consider rideshares


Pink mustache not guaranteed                                                                Photo Credit: Creative Commons

  • RSS use the same basis for determining your rate as taxis do, basing it on distance and time. They are usually much cheaper than taxis but can turn out to be more expensive during busy periods because, unlike cabs, their rates can vary. You may have heard the term “surge pricing” before. When demand spikes, for example during rush hour or a storm, Uber and Lyft add a multiplier to your fare to take advantage of the demand and draw out more drivers. Until recently, they would tell you what that multiplier is. Now, they just tell you what the fare is and leave it up to you to guess how much above normal prices that is.
  • Here’s a hint: You should have check both Uber and Lyft whenever you want a ride. Just because prices are spiking at one doesn’t mean that they won’t be cheaper at the other.
  • One of the original appeals to RSS was that there was no tipping. It was, theoretically, built into the price. That was too good to last, and tipping has become a gray area. Some people do, some don’t. You can give the driver cash or add a tip through the app. Why has tipping come into the equation? First, people are used to it from taxis. But the RSS also encouraged it, particularly Uber. The more you give the driver, the less they have to worry about drivers complaining about pay. So why would you bother tipping?…
  • Because of ratings. Not only do you rate drivers at the end of the ride, but they rate you, on a scale of 1 to 5, and there’s some serious grade inflation. Anything less than a 5 is considered to be problematic, and a driver who averages below 4.5 will have trouble getting business. Same thing for the consumer, though, so there’s additional pressure to tip and keep up your rating. It’s become a little better now, since you can tip after the ride, and your driver won’t know whether you did before they rate you, so lack of a tip is no longer as likely to get you a lower grade. But if you do decide to tip, best to give the driver a couple of dollars in cash.
  • Laws and regulations vary by geography. You won’t know anything about your driver ahead of time, other than what they look like, their rating and how many rides they’ve given.
  • The GPS technology is good, but not perfect. When you request a driver, it’s important that you check to make sure that you are actually where the device thinks you are. If you’re not, adjust the virtual “pin” on your map. Likewise, the drivers aren’t perfect, either. Your app may tell you that the driver is three minutes away but, if they take a wrong turn or traffic suddenly picks up, that three minutes could turn into eight. Based on how long you’ve been waiting, there may be a charge to cancel, although the app will tell you if there is.
  • Don’t sign up for either of them without getting a sign-up bonus. I have referral links for both Uber (Sign up with code michaelf1649)and Lyft (Sign up with code MICHAEL918142), which gets us both something (and I really appreciate it if you use my link), but a quick Google search could end up finding you a bigger promotional credit.


Points And Miles

 Okay, I had to tie this back to points and miles a little. Both Lyft and Uber have various partnerships that can get you rewards somewhere. For example, I get Delta miles whenever I ride on Lyft. For Uber, I use Visa Local Offers to get rebates that I can use on Uber. And naturally, you’ll get points on the credit card you use when you pay for your ride (Uber even has its own card.).

There’s a lot more to be aware of if you want to know RSS inside-out, but hopefully, this was a good start.

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