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Cabbies drive past people hailing for a taxi as apps offer incentives
By Ma Yue

Ruan Chengji uses an app to call for a taxi to the nearest Metro station. But instead of paying the minimum 14 yuan taxi fare, she only pays 4 yuan.

With online payment service providers wooing cabbies and passengers with their smartphone apps and knock-down deals, both are making a killing — at least for now.

Alipay, the payment service provider linked to China’s largest e-commerce company Alibaba Group, is providing a 10-yuan (US$1.65) incentive for passengers and 15 yuan for drivers for every ride booked through Kuaidi Taxi, an Alibaba-backed taxi booking app.

With so much subsidies in play, taxi drivers are increasingly taking orders on the booking application software, making it difficult to hail taxis on the road the old-fashioned way.

Despite the fact, a taxi driver can only accept five orders per day, while a passenger can only book twice on each app.

Convenient, competitive

“I find the booking software convenient and more competitive to the official dispatching platforms, who charge 4 yuan extra,” said Ruan, who uses the Didi Taxi app and pays only 4 yuan for the ride — the same as the Metro fare.

Ruan, who started using the service six months ago, said booking apps provide better chance of getting a taxi during peak hours than hailing a taxi on the road. “The apps provide a platform through which passengers can easily reach the drivers looking for business. It’s like the real estate agencies, and there is a reason for their existence,” said Ruan.

The war-like competition in the mobile payment sector has created this unusual phenomenon. Alibaba has invested 500 million yuan for its Kuaidi Taxi. More than 100,000 orders are placed through Kuaidi in China and the payment made through its Alipay service every day.

Tencent teamed up with CITIC Private Equity Funds Management Co to invest US$100 million in Didi Taxi, which said it receives 150,000 orders every day from WeChat.

The traffic authorities have yet to decide on measures to regulate the market. Till then, it seems it is making hay while the sun shines.

“You should make full use of the subsidies, as they might not be there for too long,” said a Shuhai Taxi Co driver surnamed Shen.

Shen has been using both Kuaidi and Didi even before the trade discounts came into play. Till yesterday, he had accepted around 300 orders through the two smartphone apps.

Shen said he even helped passengers install the apps on their smartphones and taught them how to make payments. It is a win-win situation for both, he said.

Despite being a big fan of apps, Shen also warned customers not to rely too much on the software during peak hours. He said booking a taxi during rush hours can be as difficult as finding one on the road.

Shen  admitted he gave priority to orders placed on the apps, forcing him to ignore passengers waiting on the roads for taxis.

Uncharted territory

It is an uncharted territory, and going by the rule book, it does not amount to “denying business” and drivers cannot be penalized for it.

According to taxi operation management regulations, it is only when a driver refuses to do business for a destination, or fails to complete an agreed dispatch order, that he or she can be fined 200 yuan.

There is no data available to support the argument that finding a taxi on the road has become more difficult since the apps and discounts were launched, but it is generally accepted that the apps have challenged the traditional taxi dispatching system.

The city’s traffic authorities are aware of the new developments but have yet to come out with a plan that is acceptable to all parties.

Sun Jianping, director of Shanghai Transport and Port Administration, said the administration will not ban the use of third-party apps, as “this is a choice of the market.” He did, however, say they would try and encourage cooperation between taxi companies and app developers.

Making more money

None of the city’s taxi companies have banned their drivers from taking orders from third party software.

The Shanghai Dazhong Taxi Co told Shanghai Daily they won’t stop its drivers from making more money by using the apps as long as they “ensure safety in operation.” The company insisted that the apps have had minimal impact on their official dispatching system because of the huge market demand.

According to Gao Liming, spokesperson of Shanghai Haibo Taxi Co, the company has been in touch with a third party taxi booking software since last summer but there has been no agreement with them yet.

Gao also said the company holds an open attitude and won’t ban its drivers from taking orders from elsewhere. The company’s traditional dispatching system takes 5,000 orders on an average every day, and the threat from the third party apps is negligible.

But not all taxi drivers are thrilled by the subsidies and the third-party applications.

“It is a short-term phenomenon, and I don’t feel the need for using the third-party software for business,” said a Haibo taxi driver surnamed Cao.

Cao is in his late 50s and drives a Touran Expo cab. “Tossing about with the software is too troublesome for me, and the company’s dispatching system meets my needs.”

Senior drivers and those who don’t use smartphones are used to the traditional ways of hailing a taxi.

Some of the passengers are also reluctant on using the mobile phone payment systems because of safety concerns.

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