Why Is Uber A Threat To Traditional Taxi Services?

Last Updated on by B. Thermidor


Uber vs Taxi – Is Uber A Threat To The Taxi Industry?

Uber vs taxi, how would I go about their comparison? Let’s try, first off it requires a lot to become a taxi driver. Here’s a few steps that it takes to become one, you have to be registered with local authorities, pay annual fees, and paying an annually rental for a taxi meter and radio.  And plus a ridiculously expensive vehicle insurance.  All and all becoming a taxi driver is incredibly expensive and time consuming.

Uber vs Taxi insurance

As for an Uber driver, there’s no need for special taxi driver insurance. Uber drivers don’t have to be registered with local authorities. The upfront costs are reasonably small.

On average, taxi insurance cost from $5,000 to $10,000 a year.  Meanwhile taxi drivers spend a fortune on insurance fees, rideshare drivers such Uber and Lyft don’t pay a dime to start driving and make money.

I wrote an article about Uber insurance coverage and when you’re actually covered by Uber.  You might actually want to spend a little time reading it for detailed info.  If you’re driving with Uber and get into an accident with a passenger inside your vehicle, you are covered by Uber.  Same as if you are en route to pick up a rider after accepted the ping request, you are covered.  Here’s where it gets tricky and everyone gets confused, if you log in the Uber app and while you’re driving or waiting around, and something happen, you’re most likely on your own.

Uber vs Taxi Cost

Furthermore, the operating costs of an Uber driver are entirely proportional to the total of hours he/she works. There are no ridiculous monthly and membership fees to be paid. They just get a small commission, which is 20-25 percent plus $1.70 per ride from the driver’s earnings.

Oh, don’t forget that you need to have cash to hand to pay for most taxis, with Uber you don’t. Many taxi cabs do not accept debit or credit cards, and the taxis that do usually charge extra.

Traditional taxi drivers are irritated and perceive Uber as outwitting the transportation regulation that ensures that only qualified, and safe drivers to carry passengers.

Yellow cab rides cost more money than Uber rides.  It is estimated that taxi cost 2.5X more than an Uber.  No wonder Uber is so popular among riders.  Uber is providing cheap rides at the expense of the drivers.  They are underpaid with no benefits. Taxi drivers are making more money than Uber drivers in most cities that Uber are available.

Additionally, it means that taxi drivers are instantly competing for just a constrained pool of business with individuals who have bypassing the prolonged, high-priced and laborious process of being a taxi driver.

The biggest threat to the current traditional taxi drivers probably doesn’t come from the enormous boost in competition. The fact that the Uber experience is technologically amazing gives them an advantage.

Uber vs Taxi – Hail for a ride

All an Uber passenger needs is a smart phone, an Uber rider app download to their phone, and ping the location, and a car will be there. The riders don’t even need cash let alone going to an ATM.  The Uber system just charges your debit or credit card.

Balance that to a traditional taxi company. Unless you whistle a cab from the street, you need to call a dispatch office and you probably don’t know the number to call. If you’re in a foreign country where you don’t speak the local language, this can be greatly difficult. You need to be able to eloquently tell your location. Like I said, if you’re in a foreign place, where you’re not familiar with the spoken language this can be challenging.


Uber has created an automated, consistent process for requesting rides. This process works in every city served by the ride sharing icon; it is cashless and requires no language skills. For riders or passengers, this is an incredibly enticing proposition. All and all becoming a taxi driver is incredibly expensive and time consuming. As for Uber goes, whether you want to become a driver, or a rider, the process and requirement is incredibly easy.