Uber Auto ditches commissions, shifts to SaaS model; full details here

In a major move to ensure auto drivers receive full fares directly, global ride-hailing giant Uber announced in a blog post that it is ditching its commission-based model and shifting to a Software-as-a-Service (SaaS) subscription model for Uber Auto. Starting on February 18, every auto ride booked through the Uber app will be cash-only, said the company. A notification on the app announced this major shift, embracing cash transactions in an increasingly digital world.

Digital methods like credit/debit cards or integrated UPI payment through the Uber app or Uber credits cannot be used, the ride-hailing noted in a blog post.

“Given the industry’s shift towards a subscription-based model for drivers, we have decided to align our approach accordingly so as not to be at a competitive disadvantage,” said an Uber spokesperson.

Rapido and other ride-hailing platforms have already switched to the subscription model. Instead of paying a commission per trip, auto drivers now shell out a fixed fee for platform access, adding a new dimension to the ride-hailing business.

Key highlights of the new SaaS approach:

- Uber will connect you with nearby drivers, but the service itself is independent of Uber

- No digital payments – riders must pay the driver directly in cash or via UPI 

- Uber credits and promotions cannot be used for auto trips. Ensure Uber credits are turned off before booking 

- No trip level commission is charged to drivers — Uber only provides the platform

- Uber does not levy any cancellation charges

- Uber suggests a fare, but the final amount is decided by the driver and user 

- Uber is not involved in fare-related disputes between riders and drivers but it will take care of safety concerns

- Drivers operate independently and Uber’s role is limited to connecting riders with drivers

Uber says in case of an error while booking an auto ride, users need to select cash as the payment method and on the same screen ‘Uber balances’ should be turned off.

Besides, there will be no GST or extra charges, says the company. What you pay for your auto ride is exactly what the driver gets, with no taxes in the mix, which also means that Uber would not be issuing tax invoices for auto trips. However, the receipt can still be used for the suggested fare from Uber as proof is needed.

In 2024, Uber took its tax concerns straight to the top, seeking clarity from the finance ministry, the GST Council, and the Authority for Advance Rulings (AAR) on whether its business had fallen under the tax net. This move followed a ruling by Karnataka’s AAR, which held that Bengaluru-based direct-to-driver app Namma Yatri was not liable to pay GST. In the case of Juspay Technologies, which operated Namma Yatri, the AAR has relied on the dictionary definition of ‘through’ and concluded that merely connecting drivers with riders via a digital platform did not constitute a taxable service.