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Uber May Add a Tipping Feature Later This Year

If a rule change proposed by the Taxi and Limousine Commission passes, Uber will need to play ball.

Since the beginning, Uber has been opposed to allowing tipping using their app. But, a proposed rule change in New York by the Taxi and Limousine Commission could force Uber to change that policy as soon as this year.

Unlike competing contractor taxi company Lyft, Uber does not allow tipping through the use of their app. Uber’s most direct explanation for why they don’t is that tips would encourage more drivers to only go to more affluent areas with riders more likely to tip, leading to discrimination. However, there’s no clear support for this assertion as it relates to ride sharing, and tips in cash are possible anyway. An easier explanation is that Uber’s strengths have always been low prices and ease of use — as of now, there’s no need to interact with the app once you get out of the car, which isn’t the case for Lyft.

Whatever the reason is, Uber may soon not have a choice. Back in the early days, Uber managed to get into the New York City market by agreeing to ensure that all NYC Uber drivers be licensed with the city’s Taxi and Limousine Commission. That means any rules the commission makes are binding to Uber, and the latest one is almost certainly directed right at them.

The short of it is that the new proposal would require drivers to be able to accept tips in the same form of payment they accept for the ride itself. Because Uber doesn’t accept cash payments for rides, that rule would require Uber to allow tips to be accepted using card — and unless Uber wants to send all of their drivers card readers, that basically means a tipping feature in the app. While the rule would only be binding in New York City, it would be difficult for Uber to make a separate NYC-specific app (if nothing else, from a PR perspective).

Uber doesn’t necessarily need to copy what Lyft does. Tipping could be implemented as a additional flat rate fee that goes straight to the driver, preserving the simplicity they’re known for. If there’s concern that drivers will give riders lower ratings for not tipping, tips could appear anonymously and in bulk to drivers. However they want to do it, Uber will need to have a plan in place by summer — the official proposal is expected in July, after which it’ll need to pass a commission vote to go into effect.

Besides the Uber-specific reasons given for the opposition to tipping, there are some general objections. The biggest one is that tips encourage businesses (most notably restaurants) to pay their workers lower wages — many service workers would make under minimum wage without tips. This means that managers foist the responsibility of fair wages onto the customer, allowing them to keep up the appearances of low prices.

Uber is an unusual example of this dynamic. While some businesses (notably Shake Shack) have done away with tipping by raising prices and paying their workers more, Uber has decided to have its cake and eat it by discouraging tipping while continuing to pay their drivers poorly. This was the enduring source of negative press for Uber before their recent troubles, which included the revelations of a toxic corporate culture and a lawsuit alleging that the company stole autonomous driving technology from Waymo, a fellow Google company. If Uber is now forced to scramble to do a 180 on a longstanding policy, it could create even more turbulence for a company that suddenly looks very vulnerable.

Via Business Insider