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March 30, 2024

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

PUBLISHED : March 21, 2018 - 20:02

UPDATED : March 21, 2018 - 20:02

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[THE INVESTOR] 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 to allow users to pay an extra fee to catch taxis faster.

Kakao Mobility announced last week 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.


Kakao Mobility CEO Jung Joo-hwan



Critics have asserted that the paid option will cause an effective hike in taxi fares as drivers opt to pick up only passengers who choose the paid option, leading to a situation where paying the extra fee becomes the new norm in 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 areas where taxis are scarce, it said.

According to Kakao Mobility, Korea has around 260,000 taxi drivers dispersed across several regions and running services at different hours. Each driver has varying preferences and priorities in the type of ride requests he or she accepts, 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 deemed more likely to accept it, according to artificial intelligence-based analytic algorithms and past call response habits, allowing for 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.

Kakao Mobility said it will adopt policing measures -- such as a points reward system -- to help ensure that drivers refrain from discriminating between ride requests.

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

“In the end, it’ll be hard for a driver to refuse a call as 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 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 (93 cents) to 2,000 won, while the immediate dispatch option is expected to be around 5,000 won. The firm is expected to use the additional profits to compensate drivers.

By Sohn Ji-young/The Korea Herald (jys@heraldcorp.com)

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