SINGAPORE: Grab introduces a fairer payment system for drivers, which will take effect from Nov 14. The new payment structure will not impact passenger fares, according to the company, as reported by TODAY.
One of the main issues raised by Grab drivers over time has been the money they receive for picking up passengers from distant locations. Grab acknowledged this feedback and made substantial changes to fix the problem.
Fairer Payment Structure
The core of this new system is replacing Grab’s fixed commission approach for selected transport services with a variable fee component. This means drivers will now be paid based on the effort they put into reaching and picking up passengers. This is a change from the previous model that only considered the time and distance travelled between the passenger’s pick-up and drop-off locations.
It’s worth noting that this new payment structure will apply to all Grab services, except for GrabShare, Hire, Standard Taxi, GrabHitch, and GrabCoach services, which will remain unaffected by the change. In practical terms, this means that drivers will be paid more fairly for their efforts without directly impacting the fares paid by passengers.
New Payment Structure Testing
The decision to implement this new payment structure is supported by pilot programs conducted earlier this year, involving approximately 300 drivers. The results showed that the new payment structure had a “neutral to positive impact” on the earnings of 98 per cent of the participating drivers compared to the previous payment model.
This new approach is particularly significant in helping taxi drivers and private-hire services deal with a decline in overall customer satisfaction and a shortage of drivers. Grab’s competitor, Gojek, has also announced a reduction in the commission collected from its drivers, which will take effect from Nov 1 and continue until at least the end of 2024.
Under the old system, drivers were given a flat fee of S$3 for pick-ups located more than 3km from their current location, in addition to a fixed commission of 20.18 per cent of the passenger fare. However, the new variable service fee will be introduced in place of the fixed commission.
This service fee will vary based on several factors. Drivers who have to travel a longer distance or spend more time reaching the passenger will receive a lower service fee, while those closer to the pick-up point will receive a higher service fee. This dynamic pricing model ensures that drivers are paid fairly for completing each booking while maintaining passenger fares at their current levels.
No Impact on Passenger Fares
Despite these significant changes, Grab has assured passengers that they will not experience any increase in their fares due to this new payment structure. The company believes it would be unfair for passengers to bear the cost of drivers’ pick-up efforts, especially considering passengers have no control over the location of their pick-up point to the nearest available driver.
Grab has observed an improvement of up to seven percentage points in the driver acceptance rate for trips involving pick-up points more than 3km from the driver’s current location. This, the company asserts, will enhance service reliability and lead to an improved experience for passengers.
While the new payment structure may raise concerns among some drivers, especially when evaluating individual trip earnings, drivers like Ms Leow San Nee, a 43-year-old Grab driver with three years of experience, see it as a positive change. She emphasizes that it’s essential for drivers to focus on their weekly or monthly earnings, where the impact of the new system is not perceived negatively.
Ms Leow San Nee has noticed improved earnings for certain bookings that involve more distant pick-up locations. This points to the potential benefits of the new payment structure for drivers, helping to address their long-standing concerns and ultimately creating a more equitable system for all parties involved in Grab.