How Uber Works and the Pros and Cons

The ride-sharing service is used worldwide

01
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Uber Is a Smartphone-Enabled 'Ride-Hailing' Service Alternative to Taxi Cabs

Uber: the most recognized alternative to traditional taxi cabs
Adam Barry / Getty

Since its launch in 2012, Uber has become the most recognized alternative to traditional taxi cabs. Uber drivers do not possess special licenses; they use their personal vehicles to offer discounted fare rides. Ride-hailing and payment are all handled through a smartphone app, and you needn't handle cash or even offer tips to your Uber driver.

Uber drivers cannot pick up street hails, which is the biggest reason Uber is not exactly a taxi provider. Instead, Uber is a kind of car-for-hire service that relies on smartphone tech as its dispatch and fee manager.

Uber is in 377 major cities around the world. Whether you're traveling to Seattle, Dubai, Tokyo, London, Paris, Montreal, or Chicago, you can expect Uber rides to be available in those cities and other major metro centers.

Uber is for adults and requires all account holders to be 18 years or older.

02
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How the Uber Experience Works

Uber experience
The Uber experience is really convenient. screenshot

Uber is intended to be easier than using a taxi. 

The Uber Process:

  1. Install the app on your smartphone and create an online Uber account. Your credit card will be attached to your account, so you never need to handle any cash.
  2. When you need a ride, use the app to tell Uber your pickup location. Your phone GPS can help you with this. There are also text message and mobile website alternatives to using the app.
  3. Uber will text you to confirm how many minutes you will wait. Rides are commonly 3 to 10 minutes away in major centers.
  4. Uber will then text you when the ride has arrived. The Uber app will also show you details of the driver, his/her name and photo, and the type of car he/she drives.
  5. Take the ride, optionally sharing with any other Uber users who can split the fare electronically with you.
  6. Payment is handled invisibly, with no tip required. You just step out of the car at the end and wave thank you.
  7. After your ride, you rate the driver on a scale of 1 to 5 (politeness, safety, cleanliness). Similarly, the driver rates you from 1 to 5 (politeness). Note: See below in this article to learn how to check your Uber rating.

That's it. The Uber experience is designed to be very simple and convenient, but with the attentiveness of tracking and customer feedback.

03
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Why Do People Love Uber So Much?

Uber is much loved by its millions of users
Uber is much loved by its millions of users. Tempura / Getty

Uber's appeal revolves around the trifecta of price, quality standards, and convenience. 

Taxi cab drivers hate Uber because Uber undercuts their fees by up to 50%. This is one of the big reasons that riders love using Uber.

Additionally, people comment that Uber cars are cleaner, newer, and smell much nicer than the ratty old jalopies that taxi drivers commonly use.

Uber riders describe that they like the convenience of invisible payment and that tips and gratuities are already embedded in the Uber fare. This is much more pleasant than having to deal with rude taxi drivers who demand cash so they can circumvent credit card surcharges.  

Uber handles all of these details in a convenient smartphone application that you install on your phone, from which you authorize payments via credit card. Uber operates at only the fraction of the overhead cost of traditional taxi companies, and they pass those cost savings onto passengers in the form of reduced fares.

The whole Uber model is very threatening to traditional taxi cab companies, who until now had monopolies on the passenger market.

04
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Uber Is Generally 25% to 50% Cheaper than Taxi Cabs!

Uber is commonly cheaper than taxi cabs
Uber is commonly cheaper than taxi cabs. Gary Burke / Getty

While the rates vary with the city and the time of day, there is substantial public data that shows UberX ridesharing can be 25% to 50% cheaper than taking a local taxi cab.  

Do note: Uber does impose 'surge pricing' for peak events like major sporting matches and New Year's Eve when their ride fees can climb by 2x to 5x for a few hours. As a rule, though, Uber rides are cheaper than taxi cabs.

Important Note: Uber does not support nor encourage tipping; any Uber gratuity is considered in the cost of the ride that you pay with your credit card. Taxi cabs, on the other hand, expect a 15% added tip beyond the metered fare. 

Sources of fare comparison data:

05
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Uber Responds Faster than Taxi Cabs

Uber is quick
Uber can have a car to you in as little as 3 minutes. Valentin Russanov / Getty

Because Uber is attractive for drivers to join, the number of available drivers usually results in very fast response time. While this certainly does vary, Uber riders describe that they get their pickups within  3-10 minutes of hailing, while taxis can take 30-45 minutes after hailing.

Because Uber drivers are rated by every passenger every day, there is the incentive to be both prompt and safe.

Riders commonly cite their reasons for staying with Uber is the short waiting time coupled with the easy payments.

06
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Uber Offers Different Service Tiers

Uber Black
Uber Black. Debenport / Getty

Uber offers a range of service tiers, spanning from single riders and groups up to executive limo services. Uber offers five tiers of service:

  1. UberX is the cheapest and most common form of Uber. Regular consumer cars, up to 4 riders. Vehicles must be 2000 model year or newer. Fares are typically half that of a taxicab in the same city.
  2. UberPOOL, offered in some cities, allows you to share your ride with another person and split the cost.
  3. UberXL is a service that can accommodate 6 passengers with an SUV or minivan; more expensive than UberX.
  4. UberSelect offers luxury sedans with leather interior, including brands such as Audi, Mercedes, BMW, which are the common vehicle brands. Expect to pay a premium price, and accommodate up to 4 riders.
  5. UberBLACK is the luxury limousine service with vehicles dedicated to executive-level services.
07
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Rate Your Driver on a 1-5 Scale After Every Ride

Uber drivers: yes, you rate them with every trip
Uber drivers: yes, you rate them with every trip. Horrocks / Getty

Part of the appeal of Uber is that drivers are under tremendous pressure to deliver a pleasant, safe, prompt, and clean experience for the passengers.  This is achieved through a minimum required customer rating of 4.6 out of 5.0.  Every passenger rates every driver on every trip.

Each Uber city sets its standards for what it will accept for the lowest possible average rating from its drivers. As soon as a driver falls below that standard, they are deactivated as a driver.

As you might guess, this rating system is a strong incentive for a driver to work hard for your passenger satisfaction.

08
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The Drivers Rate the Passengers, Too

Uber does rate its passengers
Uber does rate its passengers. Altrendo / Getty

Uber does not disclose this to the passengers directly, but every driver gets to see your rating before they decide to pick you up. And yes, every driver rates you right after you leave the Uber vehicle at the drop-off point.

The intent of rating passengers is to protect future drivers from having to deal with rude, violent, aggressive, and drunken/impaired passengers.  

If your rating drops substantially below 4.5/5, Uber can sanction you by barring you from using the service temporarily or permanently. 

09
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How To Check Your Personal Uber Rating

Going on party

You have pretty quick access to your personal Uber rating. To encourage kinder, gentler Uber rider behavior (stop slamming doors!), rider ratings are displayed right underneath their name in the Uber app's menu.

Mind your manners – your driver is watching. 

10
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Uber Is a Virtual Company; Drivers Are (Intended to Be) Contractors

Uber drivers are employees?
Uber drivers are employees?. RapidEye / Getty

This is a legally contentious matter. Uber can offer low fares because it pays its drivers as private contractors, not as full-time employees with benefits.

In 2015, a California judge disagreed with this and ruled that Uber drivers are indeed employees deserving of employee benefits and care.

This is a regulatory decision that is not shared across the world, but it does pose a difficult position for Uber whose operations are based on lean costs and part-time drivers.  Being ruled as an employer and not a general contractor could potentially pressure the company into spending millions of dollars in overhead to provide social security and health benefits to its drivers.

11
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It's Easy and Affordable to Become an Uber Driver

It's relatively easy and cheap to become an Uber driver
It's relatively easy and cheap to become an Uber driver. Engel / Getty

In large cities, taxi cab drivers pay $500-$1200 per month to their parent company and to the city. This cost includes dispatch and administration services, and any additional fees that the taxi company chooses to levy on its drivers.

Uber does not charge any of these monthly fees of its drivers. This is part of why taxi drivers hate Uber, and why so many amateur drivers are attracted to driving for Uber.

Uber requirements: if you are 21, possess a clean driver record and criminal record, have an insured car that is less than 10 years old, and if you have 50 dollars cash, you can theoretically become an Uber driver.

Uber will confirm that you are legally able to drive in your city, have basic liability insurance with minimum coverage consistent with your local laws and that your car is licensed and possesses 4 doors.

Your vehicle will need to pass a mechanical inspection at an approved technician's shop (the $50 cash fee you will need to fork up). 

The Uber background check will look into the last 7 years of your criminal history, where Uber will look for serious infractions like excessive speeding, driving while intoxicated, sex crimes or other criminal offenses. 

So, in short: if you're an honest person with a newer 4-door car, and if you're a reliable and safe driver, you can be an Uber driver within two weeks.

12
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Uber Competitors

Lyft: arguably the biggest competitor to Uber
Lyft: arguably the biggest competitor to Uber. Coppola / Getty

 Competitors to Uber include:

  1. Lyft
  2. Curb
  3. Hailo
  4. Sidecar
13
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The Controversy Over Uber

Uber is commonly cheaper than taxi cabs
Uber is commonly cheaper than taxi cabs. Gary Burke / Getty

Uber is an excellent business model; a definite swift kick to the rotten and low-quality monopoly of taxi cabs. Uber wants to give riders a convenient, affordable, and clean ride experience, and take away the hassle of cash payment and tipping.

Alas, Uber is plagued by mismanagement and questionable business choices. While the experience is largely positive for its customers, Uber needs to earn the trust and respect of municipalities and law enforcement, and show more prudence in its marketing strategies and responses to stakeholder feedback. Read more details about the controversy over Uber.

One Passenger's Thoughts on Uber vs. Traditional Taxi Cabs

Uber isn't perfect, and it is hounded by accusations that its screening process and surge pricing leave a lot to be desired. It has also yet to prove itself in a major insurance claim against one of its drivers. But in a free market world, it's about time that taxi cabs had to clean up their act and provide more value for the price. Taxi cars are old, stinky, and poorly maintained. Taxi drivers don't have the feedback-driven motivation to be polite and prompt. And taxi company owners love to levy absurd fees on their employees. Uber may not be the final answer to improving taxi services. But it has pushed the world in a good direction, and all passengers benefit from having competition in a monopolized market. Definitely try Uber for yourself and decide if you like it.