With a presence in more than 40 countries and hundreds of cities, Uber is the world’s most popular ridesharing app. Like the Lyft app, it lets riders hail drivers electronically and compensate them for their services by credit card. Unlike Lyft, the Uber app offers access to several different levels of service, from a cut-rate option (UberX) that competes with Lyft and other ridesharing apps, to a luxury service (Uber Lux) that competes with limousine firms.
To become an Uber rider, you have to download the app, provide some basic personal information, and enter a payment method to be stored on file. Since you pay for each ride, not each passenger, you can reduce the per-person cost of your fare by riding with multiple passengers.
As an UberX user, I find the app to be convenient and cheaper than a taxi for most trips. These factors make UberX particularly useful for budget-conscious riders, including students, who would think twice about using a taxi on a regular basis. The company’s higher-end services appeal to better-funded riders.
Price Points & Services
The Uber app gives you access to six price points of ridesharing service, each of which has different attributes:
- UberX. This is Uber’s lowest cost option. Prices vary by city, but Uber claims that it’s cheaper than a taxi in every market served. Typical vehicles are compact or midsize sedans and hatchbacks.
- UberXL. UberXL costs about 50% more than UberX, meaning it’s close to the price of a taxi. Vehicles are more spacious, mostly crossover SUVs and minivans, so they’re better for larger groups of people or smaller groups carrying lots of luggage.
- Uber Taxi. Uber is forging partnerships with local taxi companies to let riders hail cabs through its app. Riders don’t pay anything for this service, but you need to pay your taxi driver for the ride. Currently, this service is only available in New York City.
- Uber Black. This was Uber’s first service. It’s similar to a livery service and costs roughly double what UberX costs. Typical vehicles include luxury sedans like Lincoln Town Car and Chrysler 300.
- Uber SUV. This service is about 25% to 50% more expensive than Uber Black. It includes room for up to eight passengers. Typical vehicles include full-size or luxury SUVs.
- Uber Lux. Uber Lux emulates a limousine service, costing as much as 50% more than Uber SUV. It doesn’t use stretch-style limousines, but vehicles do include full-size, foreign luxury models such as the Mercedes S-Class and BMW 7-Series (which typically retail for upwards of $70,000).
Across all of these price points, Uber’s features include the following:
- Request a Pickup. To request a pickup, open the Uber app, select your price point, and set your phone to allow GPS tracking. The app automatically finds you and pairs you with a nearby driver, showing his or her phone number and ETA to your location. You can also manually enter your location. You must be over the age of 18 to request a ride with Uber.
- Friend Requests. You can use the app to request a ride for another person. If he or she is at your current location, use GPS to hail the ride and tell the driver that you won’t be coming along. If he or she is somewhere else, enter his or her location when you hail the ride, then call the driver and tell him or her that you won’t be riding. In both cases, Uber charges your stored payment method for the person’s ride.
- Fare Estimate. The Uber app has a built-in calculator that estimates your fare based on your selected price point, distance to be traveled, and current traffic conditions. It’s best used before you begin your trip.
- Riding. Once your driver arrives at your location, get in the car and communicate your destination. You’re allowed to sit up front, especially when using UberX, but confirm with the driver before you do – some drivers aren’t fans of this.
- Pricing. Uber’s pricing system includes a base fare, per-minute charge, and per-mile charge. There’s also a minimum fare and cancellation fee. All of these rates vary by price point and location. For instance, Los Angeles’s base, per-minute, and per-mile fares for UberX are $1.61, $0.29, and $1.25, respectively. In Phoenix, they’re $2.94, $0.25, and $1.47. Uber takes at least 20% of your total fare and passes the rest on to the driver.
- Other Fees. Uber automatically and immediately passes the cost of tolls and airport entry fees on to riders (the app uses GPS to track drivers, so it can tell if they pass through a toll booth). If there’s any damage to the interior of the car, such as burns or vomit, it may also bill your card or account for a $200 cleaning fee upon discovery. For all UberX rides in the U.S., there’s a $1 Safe Ride surcharge that funds Uber’s driver screening process.
- Payment System. Uber drivers don’t accept cash. When you download the app, you provide a credit card number that Uber saves on file. (Shortly after signing up, you may notice a ghost charge of a few dollars – the exact amount may vary – on your account for a few days. This is to authorize your account.) If you want, you can provide more than one card and choose which to use for each ride. You can also link your PayPal or Google Wallet account to Uber. When your ride is over, your card or online account is automatically charged. You can split the fare with one or more fellow riders, though you must select this option while the ride is in progress. There’s a $0.25 per-person split fare fee. Finally, you can add a gratuity to your payment if service warrants, though tipping isn’t expected.
- American Express Membership Rewards. If your credit card participates in American Express’s U.S. Membership Rewards program, you can earn double points on every Uber purchase, or use your accumulated points to pay for Uber rides. When you use the app to request your ride, specify whether you’d like to earn or redeem points for it.
- Driver and Passenger Ratings. After the ride, you have the option to rate your driver on a scale of 1 to 5. Drivers can do the same for riders. If you rate a driver at a 3 or lower, you’re never paired with him or her again, even if they’re near your location when you request a future ride. Uber doesn’t say how ratings directly affect riders. But drivers aren’t required to accept every ride request, so they can use their discretion and ignore requests from nearby riders with poor ratings.
- Receipts. Uber automatically emails you an itemized receipt for every completed ride.
- Surge Pricing. During busy periods, such as weekend evenings and weekday rush hours, Uber may temporarily increase its fares to encourage more drivers to work. The rate of the increase depends on local demand and the number of drivers currently working, but it can exceed 100% of the base rate. Uber keeps some of this surcharge – it’s not clear how much – and passes the rest on to the driver.
- City-Specific Promotions and Discounts. When Uber moves into a new city, it typically offers promo codes, vouchers, and ride credits – all downloadable – for a few weeks. It also offers referral credits when you refer new riders with a personalized link. The value of these promotions varies by time and location, so check your city-specific Uber site. Sign up for Uber using promo code uberMoneyCrashers to get $30 off your first ride.
- Lost and Found. If you lose something in an Uber driver’s car, you can click a special link on your emailed receipt to notify Uber. If this link isn’t working, which can happen with certain email servers, your account has a special page that shows all the recent rides you took and provides contact information for each driver. It doesn’t notify the driver, though – so in both cases you need to contact your driver and arrange for them to meet or send you the item. If you can’t get in touch, Uber’s support team will communicate directly with the driver.
Driver Policies & Qualifications
Uber requires its drivers to meet certain standards of quality and performance:
- Commercial Insurance. Uber Black, SUV, and Lux drivers are required to carry and pay for commercial auto insurance, with minimum liability coverage and uninsured motorist coverage of $1 million each, under their own name. For each UberX driver, Uber pays for a $1 million commercial liability policy that remains in effect from the moment the driver accepts a fare until the moment the ride ends.
- Uninsured/Underinsured Motorist Coverage. Uber pays for $1 million uninsured/underinsured motorist coverage for all UberX drivers.
- Contingent Liability Insurance. For UberX drivers, Uber pays for a contingent liability policy that pays for $25,000 in property damage and $100,000 in injury costs. This remains in effect as long as the driver is signed into the app, even if he or she isn’t accepting rides.
- Personal Auto Insurance. All Uber drivers must have personal insurance coverage that meets their state’s minimum requirements.
- Criminal Background Check. Drivers must submit to a criminal background check before being cleared to accept rides. Uber says that applicants with convictions for drug-related, sexual, or violent crimes, as well as any felony, aren’t allowed. Each driver must also pass a phone screen with a local Uber manager.
- Driving Record Check. Uber drivers must have a valid driver’s license and a clean driving record. Uber’s website doesn’t disclose the specific standards its drivers must meet.
- Vehicle Standards. Drivers’ vehicles must be from the 2000 model year or later. During the application process, each driver must provide photographic evidence that the car is in good condition. But unlike Lyft, Uber doesn’t require an in-person inspection before approving a driver’s vehicle.
- Drug and Alcohol Use. Uber doesn’t subject its drivers to drug tests, but it does take allegations of impropriety seriously. Drivers suspected of working while intoxicated, based on legitimate complaints from riders, are typically removed from the service.
Uber has several advantages over competitors such as Lyft and local taxi services:
1. Uber Offers More Ways to Pay
Since it accepts PayPal and Google Wallet, Uber doesn’t require you to provide a credit card before using its services. By contrast, Lyft only accepts major credit cards.
2. Uber Offers Flat-Fee Airport Rides
In some cities, such as New York, Uber offers flat-fee rides to local airports and other major destinations. For instance, an UberX ride between Manhattan and JFK International Airport costs $60, regardless of traffic conditions. This is comparable to local taxi services. The flat rate for an UberX ride between Manhattan and the Hamptons (about two hours without traffic) is $300. Lyft doesn’t offer flat-rate rides to any destinations.
3. You Can Estimate Your Fare Before Riding
Uber’s built-in fare estimator weighs all the factors that could affect your ride, including surge pricing, to give you a solid estimate of how much it’ll cost before it begins. While it might not be 100% accurate, it’s better than Lyft, which only provides a basic list of fares. To calculate how much a Lyft ride might cost, you need to estimate your trip’s distance and duration, then multiply them with your local per-minute and per-mile rates – a big task when you’re waiting on a street corner.
4. Uber Has a Credit Card Rewards Program
Uber pays you two American Express Membership Rewards points for every dollar you spend on the app. You can use these points to pay for rides as well. While Lyft and taxi companies can’t restrict you from earning credit card rewards points for purchases, they don’t have such special partnerships with issuers.
5. Uber Is Available in More Cities Than Lyft
Uber is currently available in nearly 200 cities across 41 countries, with new locations opening monthly. In the United States, coverage includes metropolises such as New York, smaller cities such as Fort Collins and Spokane, and densely populated regions like southwestern Connecticut and northern New Jersey. By contrast, Lyft is mainly restricted to large and medium-sized U.S. cities, making it a poor choice for international travelers.
6. Uber Has Broader Coverage Than Lyft and Some Taxis
Generally, Uber has better coverage than Lyft and some taxi companies in non-core areas of the cities it serves. For instance, its coverage in New York extends to all five boroughs, whereas Lyft only covers Brooklyn and Queens. Also, Uber’s coverage is distributed more uniformly throughout each service area.
By contrast, most Lyft drivers tend to stick to so-called hot spots, typically downtowns and universities. This is convenient if you’re in such a location, but may increase pickup times in outlying areas. Taxi drivers follow similar rules, tending to stick to dense areas where they can be hailed on the street and taking more time to respond to far-flung calls. Additionally, Uber serves some non-urban tourist areas (such as the Hamptons and the Jersey Shore) that Lyft ignores.
7. Multiple Services at One Company
With a single app, Uber offers access to a half-dozen services for riders. If you ride in taxis, livery cars, and limousines, depending on the situation, you don’t have to keep track of multiple providers. No other transportation company has such a range of rides.
8. Higher-End Services Have Faster Pickup Times Than Competitors
Uber’s app works the same at all price points – you don’t have to call ahead and make reservations for Uber SUV, Uber Black, or Uber Lux service, as you would with a livery car or limousine service. This makes it easy to ride in style on a whim.
1. Driver Compensation Isn’t as Attractive as Lyft
Though Uber and Lyft both take a 20% cut from each base fare, Uber keeps a portion of its surge pricing charges and the entire Safe Ride surcharge. Lyft passes its entire Prime Time surcharge on to drivers and takes only a 20% commission on the safety surcharge. To compete with local taxis and other ridesharing services, Uber has been known to temporarily cut fares for UberX rides by up to 40%, without notifying drivers. These tactics could have long-term effects on driver morale.
2. Potential Safety Issues
Uber has been the subject of controversy over potential safety risks for riders. For instance, a Daily Beast report outlined an unsettling situation between a journalist and an Uber driver who took unauthorized photos of her and continued to contact her, her associates, and her employer, even after being asked to stop and fired from Uber. Other safety issues include a driver in Washington, D.C. who, according to Washington City Paper, allegedly sexually assaulted a female passenger, and a driver in San Francisco who physically assaulted a male passenger, according to SFGate.
Combined with the fact that Uber isn’t subject to the same regulations as taxi companies, these issues raise the question of whether Uber is more concerned with finding enough drivers than protecting its passengers. Lyft hasn’t been the subject of such high-profile controversies. And separately, Uber doesn’t submit drivers’ vehicles to in-person inspections, which is a regulatory violation in some jurisdictions – including California, where Uber is based. Instead, the company relies on vehicle photos taken by applicants. By contrast, Lyft subjects all vehicles to a 19-point, in-person inspection.
3. Looser Standards for Driver Quality
Uber’s ratings appear to have little direct effect on personnel decisions. To be kicked off the service, drivers must repeatedly receive ratings of 1 or 2 stars, but Uber doesn’t disclose how many bad ratings it takes or how often this occurs. By contrast, Lyft requires its drivers to maintain an average rating of 4.6 out of 5 stars. Also, Uber doesn’t publicly disclose what it looks for in a driving record check. By contrast, Lyft and most local taxi companies (or taxi commissions) clearly outline their standards.
4. No Off-Peak Discounts
Uber levies surcharges during periods of peak demand, but doesn’t charge riders less than the base rate under any circumstances. (To undercut Lyft and local taxi companies, Uber does occasionally make unannounced, across-the-board fare cuts in specific markets, but these have nothing to do with minute-to-minute demand.) By contrast, Lyft’s Happy Hour pricing can cut fares by up to half during the slowest times, encouraging more riders to use the system.
5. Less Friendly and Community-Oriented Than Lyft
Uber has an aggressive, even reckless, reputation. It has repeatedly clashed with local taxi commissions, and CEO Travis Kalanick shows open disdain for the taxi industry as a whole.
Kalanick can also alienate his own drivers – for instance, according to Re/code, he stated in an interview that Uber would like to have an entirely self-driving fleet within the next two decades. And his company competes aggressively with other ridesharing apps, routinely offering deep fare discounts in cities where Lyft also operates.
By contrast, Lyft’s website proclaims, “We love our drivers,” and its friendly policies – from more generous compensation and pricing clarity to the near-requirement that drivers and riders fistbump upon meeting – bear this out.
6. Controversy Over Business Practices
Uber has faced ongoing lawsuits over certain aspects of its business model. According to The Boston Globe, a case filed in Massachusetts centers on whether Uber drivers are independent contractors, as the company claims, or traditional employees, as the labor-rights activists bringing the suit claim. A ruling in favor of the plaintiffs could dramatically increase Uber’s overhead costs and lead to changes or cutbacks in its service.
Meanwhile, a California suit, reported on by SFGate, alleges that Uber improperly takes a cut of drivers’ tips, which is illegal under state law. Uber claims that fares and surge pricing surcharges aren’t tips, and thus aren’t covered by the law. A victory by the plaintiffs here could force Uber to raise its prices.
Regardless of the outcomes here, drivers have raised hackles about these and other practices that they see as unfair. If morale worsens significantly, Uber’s service could be affected in unpredictable ways.
Uber is a versatile app that offers an alternative to taxi companies and higher-end car services. Due to low prices and wait times, it’s particularly useful for budget-conscious riders and those who need to get places in a hurry. Moreover, its ambitious principals are rapidly expanding its reach, creating opportunities for riders and drivers in new cities every month.
However, intensifying controversy over its business practices pose a challenge to Uber, and could significantly change how it operates over the long term. Feel free to download and try the app, but be sure to keep an eye on the latest news about the company.
Unparalleled geographical coverage, flexible payment options, and a range of services under the same corporate umbrella all position Uber as the ridesharing industry’s undisputed leader. However, the company has a darker side, lacking the driver-friendly, community-first vibe of other ridesharing providers. Over time, poor treatment of drivers could lead to safety and service issues.
3.8 out of 5: Coverage, flexibility, and various price points all work in favor, but Uber’s corporate citizenship is lacking. Off-peak pricing is unfriendly to riders too.
Have you ever used Uber or UberX? How did the experience compare to taking a taxi or limousine?