Uber Joins Ola, Rapido with Subscription Model to Boost Driver Retention

Uber has introduced a subscription-based system for its driver partners across cars, autos, and bikes nationwide, as per the news reports. This brings it in line with other mobility aggregators, including Ola and Rapido, which already offer subscription plans to drivers.

How the Model Works

Under the new system, drivers pay a daily or monthly subscription fee. Unlike the previous commission-based system, where Uber deducted 15-20% of a driver’s fare, almost all earnings now go directly to the driver. Uber has launched both daily and monthly plans for its partners.

Impact of GST Structure

The transition is linked to GST treatment for aggregators. Commission-based models like Uber and Ola previously faced 5% GST without input tax credit (ITC) or 12% with ITC. SaaS-based models, used by companies such as Rapido and Namma Yatri, charge drivers 18% GST directly. This difference created inconsistencies across the sector.

Reason for the Shift

Uber noted this aligns with broader industry practices. The company cited market trends and the lack of clarity on GST for commission-based operations as reasons for switching to a subscription approach. This change reflects an industry-wide trend toward SaaS-style facilitation.

Previous Testing

Uber had previously tested subscription options. Dominic Taylor, the company’s regional general manager for rides, confirmed in July that alternative business models were being explored to improve earnings and operational clarity for drivers.

Rapido and Ola have already adopted subscription systems. Rapido’s rapid expansion and subscription offerings have influenced the market, drawing some drivers away from traditional commission-based platforms. This has contributed to the broader shift among aggregators.

Read More: SEBI Revamps Penalty Framework to Boost Ease of Doing Business!

Conclusion

With Uber joining Ola and Rapido in offering subscription models, the Indian mobility sector is moving away from commission-based structures. Drivers now have the option to retain more of their earnings, and the sector is gradually adjusting to changing GST interpretations.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.