Kakao Mobility to consider lowering fees for taxi drivers

[Photo by Lee Seung-hwan]

Kakao Mobility Corp. will swiftly deliberate on lowering the membership fee for taxi drivers to 3 percent or less in response to the scrutiny over high fees and allegations that it is dominating the taxi industry via its KakaoT platform. This decision came 12 days after President Yoon Suk Yeol publicly criticized Kakao’s industry dominance, deeming it “very immoral” on November 1.

In an emergency meeting on Monday with four groups representing taxi drivers, including the Korea National Joint Conference of Taxi Association, Kakao Mobility announced plans to launch a new scheme in 2024 with a lower membership fee of 3 percent or less to alleviate the burden on drivers and address industry needs. Kakao Mobility Chief Executive Ryu Gung-seon participated in the meeting, stating that the app’s algorithm that matches passengers with customers will also be improved to ensure a more equitable distribution.

Kakao Mobility currently charges no fees for non-member taxis, but its member taxis, including KakaoT Blue and Black, face a 20 percent fee on sales, with 15 to 17 percent returned to the driver. The actual fee rate for drivers is around 3 to 5 percent, according to the services provider, and the taxi industry is demanding the abolition of the fee-charge scheme as well as a lower commission rate.

Recognizing the challenges of reforming the commission system for over 50,000 drivers under the current scheme, the platform and taxi representative groups agreed to develop a new scheme with a commission rate of 3 percent or less by year-end, launching it in 2024. Kakao Mobility confirmed that taxis within the existing system could switch to the new one.

Kakao Mobility will form a joint committee with external experts within the next two weeks to address issues of equitable matching, fee system reform, and improvements to the working conditions for taxi drivers by December 31. On top of reducing fees, the company also plans to reshape its business structure and is seeking various opinions from the industry and experts to address all contentious issues comprehensively.

Kim Beom-su, the founder of Korean platform giant Kakao Corp., also expressed dedication to a thorough review of all businesses to meet public expectations. He stressed that a concrete plan would be formulated by year-end, with implementation slated for the following year.