Kakao Mobility slashes drivers’ commission

[Photo by Lee Seung-hwan]

Kakao Mobility Corp. plans to cut commission rates for its member drivers by nearly half starting in June 2024.

The company said on Thursday that it will reduce the maximum commission for drivers enrolled in Kakao T, its ride-hailing app, from 5 percent to 2.8 percent. The decision reflects the agreements reached with the drivers after discussions with major taxi associations and 14 regional member taxi organizations since December 2023.

The new 2.8 percent commission, which will take effect in June, is part of Kakao Mobility‘s agreements with the taxi industry. The company expects to significantly reduce the financial burden on taxi operators by lowering the initial member commission.

Kakao Mobility also pledged to test a new matching algorithm for its taxi-hailing service that aims to integrate artificial intelligence-based recommendations and estimated time of arrival (ETA) systems in response to feedback from the taxi industry, with plans to implement it in the third quarter of 2024.

The mobility app previously used AI recommendations for taxi calls, and only turned to the ETA system when the AI match failed. Although the taxi industry expressed a preference for the ETA system, citing its ability to allow drivers to pick up more passengers in a limited amount of time, Kakao Mobility has not actively used the ETA score system due to concerns about calls from sparsely populated areas being dropped.

“We have received feedback from the taxi industry on the importance of the ETA score and are committed to reform by incorporating both methods to improve the matching rate even further,” the company said.