Kakao Taxi, South Korea’s most widely used taxi-hailing mobile app, recently announced the introduction of a “paid option” that would allow users to call up taxis faster or immediately by paying an extra fee on top of the ride fare.
The new feature, set to be rolled out by as early as late March, has been drawing mixed reactions from local users, despite Kakao’s reassurance that it will retain the current taxi-hailing service option offered free of charge.
Extra fees for faster pickup
Kakao Mobility, which operates all of Kakao’s mobility services including Kakao Taxi under the collective Kakao T app, announced last week that it is adding two paid options to its taxi-hailing service: “priority call” and “immediate dispatch.”
A priority call option sends a user’s ride request to a taxi driver who is more likely to accept the call according to AI-based analytic algorithms and past call acceptance habits, enabling faster pickups than before.
The immediate dispatch option allows paying users to be immediately matched with an available taxi nearby. It intends to be the fastest and most certain way for users to secure a ride.
Though Kakao has yet to finalize the amount of fees, the priority call option is expected to cost around 1,000 won (90 cents) to 2,000 won, while the immediate dispatch option is expected to be around 5,000 won.
Kakao plans to use the profits it obtains to compensate taxi drivers in the form of cashable reward points.
The fees will be immediately charged to the user’s credit card registered to the app when a match is made under the paid options. Users pay for the ride fare separately at the end of the trip.
Kakao Taxi will continue offering the current taxi-hailing service free of charge, under the “regular call” option where passengers can place ride requests for free.
With the new options, Kakao Mobility said it hoped to incentivize more taxi drivers to mobilize their services during peak late-night hours, and address recurring complaints that taxis discriminate ride requests based on destinations.
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Kakao Mobility CEO Jung Joo-hwan (Kakao) |
Mixed reactions
The proposed changes to Kakao Taxi’s taxi-hailing system have prompted mixed reactions from users of the app.
Proponents of Kakao Taxi’s new feature have said they are willing to pay extra to ensure they get a cab during late-night hours at central locations when it is nearly impossible to catch a cab home.
“On a late-night weekend at Gangnam Station, I’ve had to wait more than an hour to find a taxi willing to take me home, because drivers prefer long-distance rides and I live too close. I’d be open to paying more if it means a guaranteed cab,” said 29-year-old Kim Min.
Opponents have asserted that Kakao Taxi’s paid call option equates to an effective hike in taxi fares. They argue that taxi drivers will prefer the more profitable paid calls to regular, no-fee calls, prompting a situation where only paying users find a ride match.
“In the end, only app users who pay the extra fees will be able to catch cabs on-demand. Since a majority of Korea’s taxi-riding population uses the Kakao Taxi app, it would look similar to an effective hike in taxi fares,” said Park Jang-hwan, a 31-year-old office worker in Seoul.
Critics have also pointed out that the proposed 5,000 won fee for the immediate dispatch option is too expensive, considering that the current baseline taxi fare (for 2 kilometers) is 3,000 won.
Seoul City is currently considering raising the basic taxi fare by as much as 1,500 won from July and extending extra charges in the nighttime.
Is it legal?
On top of the user complaints, Kakao Taxi is also facing controversy over the legality of its new “paid call” options.
According to Korean transportation law, taxi drivers are prohibited from collecting fees other than the amount shown by the price meter that calculates the final fare based on distance.
To abide by the law, Kakao Mobility CEO Jung Joo-hwan has explained that the fees it plans to collect are considered a form of “platform usage fees” -- fees users pay for using a particular app.
Jung said the firm would use these new funds to build a reward system where taxi drivers earn cashable points, depending on their driving and call acceptance habits. This includes compensation for drivers who accept priority calls and respond to immediate dispatch requests.
Critics of Kakao’s proposed fee system have argued that the “platform usage fee” is effectively used to compensate drivers, who end up earning more by picking up higher-paying passengers.
Charging users extra fees for faster taxi-hailing, similar to what Kakao Taxi is now attempting, has been considered illegal in the past.
In 2015, SK Planet introduced a new option to its taxi-hailing app T Map Taxi, in which users could choose to pay a fee of up to 5,000 won to request a ride. At the time, the local authorities ordered the option’s removal, as it was considered a breach of the local transportation law, according to local news reports.
The Kakao Mobility CEO has reassured that the firm has engaged in sufficient discussion with the Ministry of Land, Infrastructure and Transportation, and that the local authorities have concluded the proposed changes to Kakao Taxi are within legal boundaries.
The Kakao T app currently dominates Korea’s taxi-hailing business. It has more than 18 million subscribers in Korea. Around 96 percent of the country’s certified taxi drivers are registered with the app.
By Sohn Ji-young (
jys@heraldcorp.com)
