The emergence of ridesharing platforms such as Uber and Lyft has not only transformed commuting habits but also reshaped the gig economy landscape, granting drivers unprecedented levels of flexibility and autonomy.
However, complex gig economy pay models, unlike the straightforward fixed salaries and benefits of traditional employment, have triggered both criticism and legal disputes around driver classification and the perceived lack of adequate compensation for their time and expenses.
Read more: Uber and Lyft to Pay $328 Million Settlement for Withholding Driver Pay
In response to these concerns, Lyft recently unveiled a new pay standard for its drivers, which will see them earning 70% or more of rider payments weekly, following deductions for external fees. Should a driver’s earnings fall below the 70% benchmark, Lyft will compensate them for the difference, ensuring a minimum income.
According to Adam Warner, head of U.S. Operations at rideshare company inDrive, Lyft’s transparency with its driver community is a step in the right direction and ultimately benefits all parties involved.
“Making sure that drivers understand exactly what they’re getting paid for the work that they’re doing is very critical in earning the trust of everyone that participates in the gig economy,” Warner told PYMNTS in an interview.
Currently, inDrive is active across more than 40 nations and has garnered over 175 million downloads worldwide.
Unlike other ride-hailing apps, the app allows users to set a fare for a selected route. The trip, alongside the destination, is then displayed to nearby drivers who can accept it or propose a counteroffer. Subsequently, passengers receive various offers from drivers, and can choose a ride based on fare amount, driver ratings, estimated time of arrival and make or model of the car.
In the absence of complex algorithms used to determine pricing, Warner said drivers are aware of the exact amount a passenger pays right from the onset as well as the commission and operating expenses that are deducted from the fare.
This level of transparency also extends to inDrive’s fee structure, he added. In contrast to Lyft’s model, where drivers are assured a 70% share of earnings only after operational expenses and a 30% commission are subtracted, inDrive opts for a more straightforward approach.
The platform charges drivers a flat rate of 30% of the total fare, ensuring a more substantial wage. Of that 30%, 20% is allocated for operational expenses, with roughly 10% designated as commission.
Nevertheless, Warner reiterated Lyft’s recent actions as a positive move, especially in terms of providing additional compensation to certain drivers.
“I do anticipate roughly 15% to 20% of the driver base will be in that bottom percentile where they’re going to have to get topped up to get to that 70% and guaranteed and that’s fantastic,” he said.
Rideshare drivers, like many others, share the universal desire for quick access to earnings.
At inDrive, fares minus the 30% fee are deposited into the driver’s wallet once a ride is completed. From there, drivers have the option to transfer funds to their linked bank accounts, typically accessible within 24 hours.
Looking ahead, Warner said the company is considering introducing an instant pay feature that would enable drivers to cash out earnings in real time.
When it comes to emerging technologies, Warner highlighted vehicle-to-vehicle (V2V) communication technology as a significant advancement.
With V2V communications, vehicles are aware of each other’s presence. This means that should one car brake suddenly, for example, vehicles several yards behind could receive a safety alert before approaching too closely.
However, in November of last year, U.S. auto safety regulators withdrew a proposed rule mandating all new cars and light trucks to be equipped with V2V systems transmitting and receiving vehicles’ information, including speed, direction and braking.
Despite these regulatory uncertainties, Warner emphasized the potential of V2V technology once fully deployed, particularly its ability to significantly reduce road accidents and enhance the overall driving experience.
As Warner pointed out, “If I’m driving distractedly, it’ll say, ‘You’re getting too close,’ and the vehicle automatically slows down,” potentially preventing an accident.
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