Uber marks a 20% tip for a service unavailable in India. What next?

Ram, an Uber driver in Delhi in his mid-30s, has deployed his car with a private company, but sometime he ferries Uber passengers.
He learnt driving just two years ago, when Uber and Ola started giving huge incentives to drivers and income in some months were as high as Rs 1 lakh. That’s more than the median salary of engineers from the Indian Institutes of Technology (IITs).
But that’s not the case anymore. Driver incomes have dropped too, often, less than Rs 30,000 a month. Drivers like Ram are considering getting off Uber and finding jobs elsewhere or deploying their cars with some steady hirers like companies that take cars and drivers on monthly leases.
This trend of falling monthly wages is true for Uber drivers the world over and has led to a global demand for in-app tipping (Uber calls it gratuity) for the driver, using a credit or debit card. The feature is only available for UberTAXI, which allows users to hail a licensed taxi (like the black cabs in London) in different cities at the tap of a button.

UberTAXI is not available in India. But, what’s surprising is that Uber has introduced the in-app tips feature here. It is not visible on the app but can be seen by logging on to your Uber account from its website.
Under the ‘Payments’ section, the ‘Gratuity’ comes with a default setting of 20% — meaning you would pay one-fifth of your fare as a tip. Tips are normal in taxi services in several cities in the West. The Uber gratuity can be reduced to zero or increased to 30% of the total fare, which means a commuter might end up paying more for the same ride, if Uber were to activate the tips feature on its other services like UberGO, UberX, Uber XL, Airport, or UberHIRE in India.
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“This was introduced roughly six months ago. India does not have a tipping culture like the US,” said a source close to the company.

To be sure, there are no indications that Uber India will introduce the tipping feature to its services here, but this country has the second-largest customer base for the company worldwide and it needs operations to become profitable here.
While unaware of the feature, Uber drivers in India welcomed the possibility of it being introduced here. “We are not aware of this, but it will help Uber drivers a lot if we can get 10-30% as additional money. We will have a discussion with Uber on this,” Shashi, an Uber driver in Bengaluru, said.
The biggest question is why would Uber show a tipping option in an Indian user’s account. “I looked at the screenshot… and it seems this is tipping (called gratuity) which we don’t have in India. Also tipping (mentioned as ‘Gratuity’) is absolutely voluntary for riders,” an Uber spokesperson said, responding to FactorDaily’s query.

In a blog, Uber clarified, “… that tips are not included on Uber’s platforms (except on UberTAXI), and that tipping is neither expected nor required…”
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Market watchers are not very convinced. “This was intended to compensate the drivers, but Uber has thrown it under the radar for a while,” said London-based consultant Deepesh Rathore, co-founder of Emerging Markets Automotive Advisors. “Uber has to move towards a profitable business model. This is step in that direction. The time is behind them when they can afford to continue to throw money to drivers.”

When asked if this could be a technology glitch, Rathore responded with an emphatic “No.” In technology companies like Uber, a feature like this would have to pass several  layers of decision-making, he explained.
Speculation is rife. “It can be differentiated pricing for different profiles of customers… That’s what a lot of ecommerce companies are doing,” said Arvind Singhal, chairman of Tecnhopak, a consumer research firm.
Ram, the Uber driver, does not know about tipping. “We don’t know about it, but if tipping is allowed, we might earn some extra money,” he said.
Also read: Ola loses more money as it battles Uber; revenue climbs steadily