Kakao Taxi says addition of ‘paid option’ for faster pickup will not cause fare hike

South Korean users have been expressing concern over the latest news that Kakao Taxi, the country’s most widely-used taxi-hailing mobile app, will be adding a new option that allows users who pay an extra fee to catch taxis faster.

Kakao Mobility announced last week that it is adding two paid options to its taxi-hailing service: “priority call” and “immediate dispatch.” It will continue to offer the current taxi-hailing service free of charge, under the “regular call” option.

Critics have asserted that the paid option will cause an effective hike in taxi fare as drivers opt to pick up only passengers who choose the paid option, leading to a situation where paying the extra fee becomes a new norm to securing a cab via the Kakao Taxi app.

In response, Kakao Mobility, which operates the taxi-hailing app under the collective Kakao T app, stressed that such fears are unlikely to materialize, citing its analysis of drivers’ pickup habits.

Regarding concerns that taxi drivers will no longer accept regular calls, Kakao Mobility said its analysis of drivers’ habits and priorities suggest that drivers will continue to accept the free calls made at times and locations where taxis are widely available.

The paid option is likely to affect only peak hours, when demand for rides surpasses the supply of taxis available, or in remote places where taxis are scarce, it said.

According to Kakao Mobility, Korea has around 260,000 taxi drivers, dispersed across regions, who run their services at different hours. Each driver has varying preferences and priorities in the type of ride requests they accept, which may or may not be a “paid call.”

The firm’s new priority call option sends a user’s ride request to a driver who is more likely to accept it, according to artificial intelligence-based analytic algorithms and past call response habits, allowing faster pickups.

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.

By incentivizing drivers, Kakao hopes more passengers will be able to hail taxis during times of the day when it is most difficult to find an available cab.

Moreover, Kakao Mobility said it will adopt policing policies -- such as a point reward system - to help ensure that drivers refrain from discriminating ride requests.

Kakao also believes that drivers will find it difficult to discriminate calls due to the competitive nature of the taxi business.

“In the end, it’ll be hard for a driver to refuse a call they prefer, just because it’s not a ‘paid call.’ It’s uncertain whether a similar request will emerge again,” Kakao Mobility said.

“When a ride request is made, it is shared with all the drivers in the area. This means another driver might accept that call while you are being indecisive. For this reason, drivers are likely to find that it’s better to accept a call they prefer when it comes, regardless of its status.”

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. The firm is expected to use these new profits to compensate drivers.

By Sohn Ji-young (jys@heraldcorp.com)