Ride Sharing Services Explained

The future of transportation looks to be an amazing place, from magnetic intercontinental travelling pods to autonomous self-driving Google cars that offer free rides. However, at this point in time all of those options are still in the future and the fight at the moment is between ride sharing services like Uber and traditional modes like yellow and black cabs (taxis).

UberBy now you have probably heard of Uber and its merry band of drivers as they have expanded to 220 countries worldwide and continue their expansion even when they are hit with cease and desist letters or are considered illegal where they are operating. The main reason why Uber has gained such a widespread presence so quickly is because consumers have found these Ride Sharing services to be more convenient, more often a better customer service experience and often even cheaper than a taxi.

So what is a ride sharing service?

You may harken back to the 70s and 80s and think that sticking out your thumb on a rural route would qualify as a ride sharing service. Technically this is true, but today’s modern ride sharing service is a huge commercial enterprise that offers a career to thousands and rides to millions. They may be more correctly called a “ride hailing” service as you are not sharing a ride and are in fact paying for it.

Uber is the largest of the ride sharing operators in the world and so we will focus on how they operate first in this discussion. Uber essentially is an online app that offers to place passengers in driver’s vehicle and expedite the experience. As a user you simply download the app to your phone and “hail” a ride through the app when you want to go somewhere. An Uber driver in the vicinity picks you up and ferries you to your destination much like a taxi. Unlike a taxi, the payment for the service is done electronically through your credit card automatically after you exit the car upon arrival at your destination. Tipping is optional.

Fares for Uber have up until last year been cheaper than traditional taxi services, basically because Uber has never paid the huge licensing fees in the cities that they operate that taxi services do. Since Uber itself is not a transportation company they claim, they are simply matching passengers with drivers; they often find loopholes or flat out ignore local rules, regulations, bylaws or laws.

The services offered by these company are more varied with Uber offering three different ride options including UberX, UberXL and UberBlack. UberX and XL are the services standard ride options that offer a casual experience with a driver that is using their personal eligible vehicle for the ride. XL simply means it is a larger vehicle than an UberX. Often you can even opt to sit in the front seat. While UberBlack is more synonymous with a Limo service, where you are picked up by a driver in livery clothing, you sit in the back and vehicles are usually larger or more luxurious.

Other services have also developed since Uber’s arrival in 2009 to either challenge Uber or offer a slightly different option. Lyft, Uber’s largest competitor in the same space arrived in 2012, but there have been a number of other startups challenging our notions of what pay for hire transportation looks like. Lyft offers two services that mirror the Uber experience including a driver in their own vehicle and a premium service in a larger SUV.

Another rideshare company called SideCar had a similar business practice but offered passengers the ability to pick their driver. However, this company has since moved out of passenger services to strictly packages. Carma is another ride hailing app company from the state of Texas but is focusing on just the commute portion of the industry. You click the app when you get in the shared ride and click when you get out with the app reimbursing the driver for your ride.

However there are other services that are making a mark on the industry as well. There are a number of app companies that are trying to bridge the gap between taxis and ride hailing services that provide a hailing experience with an app, but connected to traditional taxi companies. These apps include Flywheel, Curb, and Hailo which offer the ability to hail cab online, schedule rides and pay online. However rates are taxi rates and cars are not as nice typically as ride sharing companies.

Furthermore there are a number of actual ride share, carpool and car sharing service companies that offer an even wider range of services similar to these ride hailing apps like Uber. First the true ride sharing apps like Relay Rides and Ridejoy which lets drivers list empty seats for trips and payments are orchestrated directly with the driver. These offer carpooling services as well.

Whereas companies like ZipCar, JustShareIt, ZimRide, Car2Go and others are offering you access to cars parked all over a city. You simply hop in and pay for your time usage of the car and can drop it back at another lot. However, these services are not in the same turmoil and lawsuits as Uber and Lyft as described below.

TaxiTraditional Taxi services in cities like New York pay huge licensing fees to be the only players that can pick up passengers roadside or for delivering passengers to airports. Black cabs are “pick up on appointment or arrangement” basis and they also typically pay for this right. Ride share companies have sidestepped these arrangements or outright ignore legislative laws. They have been able to accomplish this in a two-fold way. First, the operation itself is conducted solely over the internet and is essentially a private peer to peer network.

Secondly, there have been huge public outcries in locations where these ride sharing services have been shut down, forcing local politicians often to abandon their condemnation or change the local laws to allow these services. This is not the case in every jurisdiction, as Uber is banned in Brussels, Belgium and Uber faces a 10,000 euro fine for every fare conducted within the city. The real showdown between these services is yet to happen.

The innovation of these services proves their worth; their legality will likely happen even if their pricing suffers as a result.

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