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Rideshare or Taxicabs-Which Is Better to Work For?

Updated on November 8, 2018

Technology is always improving and so is the way we travel around. With the increase in Network Transportation Companies (NTCs), or Ride Share companies, many people are able to make extra money or an income driving people around cities. But what about the taxi companies that have been in place for years? Is it really better to drive for companies like Uber, Lyft or Sidecar verses a traditional cab company?

Do you drive for a ride share company?

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The basic differences

Ride share companies boast about their ability to offer drivers unlimited income, no set hours and complete control of their own business in a safe environment and in the comfort of their own vehicle. The question then becomes, how is that possible? The driver downloads an app and logs in when they want to drive, a user or client requests a ride, the closest driver is given the option to accept or reject the trip. If the first driver rejects the trip the offer goes to the next driver down the line. Simple, makes sense. The driver that accepts the trip then goes to the pick-up location to get the client and proceeds to drive them to the drop off location. Once the client has exited the vehicle the driver selects “End Trip” and the client’s debit or credit card on file is processed for the payment. Pretty simple and straight forward.

Taxis accept both calls to dispatch or directly to your driver of choice and also pick-up street hails. A street hail is when you simply walk up to a taxi and get in, give the driver the drop off location and they take you there. When you get out of a taxi you often have the option to use a debit or credit card or pay cash on the spot. No card information is stored and you have the ability to split the fare if there are multiple people and you each want to pay part of the fare. Taxis are dispatched differently all over the world, some companies use a radio system, cell phones and call individual drivers or dispatch apps. Customers can request a specific driver through some companies or call the driver directly if they choose.

Getting the job

The biggest differences between ride share companies and taxi companies is behind the scenes, how drivers get started and requirements. With taxis it comes down to local laws. Some states require that drivers each have a local business license, this is because taxi drivers are individual contractors, they are not employees and operate as their own boss, handle their own taxes and business costs. This pertains to all taxi drivers even if the driver leases a vehicle from an established taxi company, the lease is a business expense. Some states also require a Department of Transportation (DoT) physical. No matter what state you are located in, however, criminal and driving backgrounds are required, as are fingerprints on file with the local governing police department. Permits are valid for a year at a time. Each state or local area has a set time frame for renewal of “for hire” drivers. Vehicles are inspected yearly in most areas to ensure that everything is operating properly and that a taxi meter is set at local standards. Some areas have stricter background checks due to military bases and other federal factors. Many companies around the country allow drivers to bring and use their own vehicle, provided that it meets “for hire” vehicle standards.

Ride share companies are different in that you do use your own vehicle at the moment, however some companies do appear to be expanding into leasing drivers vehicles for work. Right now you take your vehicle that is newer, typically no older than 10 years old depending on company, to an auto shop and get the vehicle inspected to make sure everything that is supposed to work does in fact work. Potential drivers also have to submit information online for a basic background check, personal insurance information, registration and driver’s license. Once approved the driver must enter their banking information to receive weekly payments. Download the company’s app and away you go. Some companies hold orientation meets, driver meet and greets and other gatherings that a new driver may be invited to attend before accepting their first fare.

If you have your own 4 door, newer vehicle a ride share company does seem to be the quicker way to start working depending on the area you live in. Everything is streamlined for virtual submission and very little leg work needed. But let’s go further.

Getting paid for working

Driving, that’s the job! With both ride share companies and cab companies customer service matters. With taxis you want the tip because it’s extra income, and now with improvements, ride share companies are allowing tipping as well. But with ride share companies drivers are also trying to get as many stars (high ratings) as possible with every fare. Taxi drivers have the option to not only accept cash but thanks to mobile card processors like Square and Paypal, drivers can now accept credit and debit cards on the spot. In many places it is not a requirement for taxis to accept cards but many drivers see the benefits.

Ride share companies like Uber and Lyft require customers to link a debit or credit card to their account before requesting a ride. The card on file will be charged the cost of the ride once the ride has ended. The driver is then given a breakdown of the trip along with any fees the company takes out. Typically pay is distributed once a week as direct deposit to the banking information driver provided while signing up for the company. No cash transactions are allowed. Ride share drivers are not allowed to pick-up street hails, all trips must be processed beginning to end through the company’s app.

Taxis are quite a bit different when it comes to pay. Drivers accept cash and many now accept card. Cash is kept and cards that are processed going into their bank accounts most of the time. Some taxi companies require a portion of the lease be paid daily and the driver is responsible to make that daily payment. Fees associated with taxi drivers pay are paid by the driver after they receive payment from customers. Fees may include card processing fees, airport fees (some airports require a set dollar amount per fare that is picked up from airport property), company fees (some larger cities have a set dollar amount for each fare that a driver must pay to the company). Card processors send payments typically once a day but many have the option to access money instantly. Essentially, taxi drivers receive all pay daily or within 24 hours.

How much does it cost to drive?

So now you have an idea of how each basically works for the drivers but the biggest part that is overlooked at first are the expenses. Expenses between both are vastly different but serve the same purpose.

Ride share companies require you have your own vehicle and personal insurance. Your vehicle must be maintained and all laws locally be met such as current insurance and registration. You are able to use a vehicle you are making payments on so you may also have a monthly car note as well as all the fuel needed to continue to work. Maintenance is a large part of expenses for ride share drivers with the most common items being oil and brakes. But like many full time drivers will tell you, driving for work will take a toll on your vehicle and other repairs are needed often such as tires, air conditioning and more. All the costs involved in driving your own vehicle are your responsibility. If your vehicle is in the shop you can’t work.

Leasing a taxi (a common way to be a taxi driver) is much simpler. Drivers who lease a taxi from a company pay a set weekly amount. The amount they pay covers the cost of maintenance of the vehicle, repairs when needed and commercial insurance. With many companies if your regular vehicle is in the shop you would be given a temporary vehicle to drive or not charged for the days you are unable to work. You as a driver are still required to pay for your fuel and fees such as airport pick-up fees or tolls for any toll roads you travel but those fees are often covered by the customer you are transporting. These situations only apply to those drivers that lease their taxi from the company. Some drivers decide to be Owner-Operators and they typically pay the taxi company a small amount monthly for dispatch and to be able to put the company name on their vehicle and they handle all expenses included commercial insurance and repairs.

So which is best for you?

In the end it comes down to location when decided which is best for you if you want to pursue a career in driving people. Local laws govern taxis and some areas don’t allow ride share companies. Before jumping into driving for a ride share company or a taxi company you need to carefully weigh your options and resources. If you don’t have the means to repair your own vehicle from the start then leasing from taxi company may be a better option. If you live in an area where the out of pocket costs of becoming a taxi driver is not something you can afford then maybe looking into one of the ride share companies would be better. I live in Northwest Florida and the cost of becoming a taxi driver are made back in a matter of the first few hours you work on a slow day. If you prefer daily pay over weekly pay then a taxi should be your go to also if you don’t own your own vehicle. Another thing to look at before making a choice is the tourist business in your area. The more tourism in an area the more likely a ride share company is going to be a good choice because people from major cities travel into the area for vacations. Ride share companies all start in major cities, they have since branched out to smaller markets but in many places they haven’t yet made a strong stand against the tried and true taxi cabs.

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