Taxify seeks to steal market share from Uber by giving drivers larger share of the fares.
The key to success for ride sharers is keeping drivers happy so they run the app ensuring enough cars to meet passenger demand.
Estonia upstart Taxify is hoping to win over drivers and take on giant Uber by offering a larger share of the profit.
Upstarts across the world, such as Addison Lee and Lyft, are trying to catch Uber in the on-demand ride sharing market by securing brand loyalty.
But Uber has gathered critical mass and careered to a valuation of over £60 billion (Sh7.9 trillion) in just eight years, despite its lack of profits.
It has kept rivals at bay, partly by offering incentives to drivers to stay online.
Taxify, a minnow compared to Uber, cannot afford these perks but believes that by taking a smaller share of fares – 10-20 per cent compared to Uber’s 20-25 per cent – it can steal market share form its San Francisco-based rival.
It also hopes that allowing drivers to take cash as well as credit card fares will also help it attract more passengers.
“Taxify’s biggest advantage is the focus on good service by treating the drivers and riders better than other platforms. This means having higher pay for drivers thanks to lower fees,” Chief Executive Markus Villig told Reuters at Taxify’s headquarters in Estonia.
“By the end of the year, I think we will be Number One in about 10 countries in Europe and Africa.”
An Uber spokeswoman declined to comment for this story but Uber has said it had fare revenue of around $20 billion (Sh2 trillion) last year. Mr Villig said Taxify generates fares worth ‘tens of millions of euros’ each month.
The basic business model is identical – both hook up passengers with self-employed drivers. Many incumbent cab companies in Europe have developed Apps to operate in a similar manner but most have focused on their domestic markets.
But Taxify is unusual in launching in around 18 countries, mainly smaller markets in Eastern Europe and Africa, where Uber is not present or is not yet dominant.
Uber usually takes market share by giving drivers money to sign on to its App – paying them even if they are not driving passengers. Then, as it becomes more popular with passengers, it withdraws the inducements. Analysts says Uber aims to build a customer franchise and stable of drivers to dominate the market.
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Taxify has avoided expensive head-to-heads with its much larger rival but its model will soon be tested as Villig plans to launch in London – Uber’s biggest European market in the coming months.
“We are coming in as a second wave,” he said.
Founded three-and-a-half years ago, Taxify has 140 staff worldwide, a third of whom are based in Estonia. It says it has 2.5 million active passengers in 18 countries.
Uber says it has more than 12,000 people across the world and millions of passengers in 70 countries.