A common misconception is that when you take an Uber and pay for it through the app, a tip for the driver is included.
But that isn’t the case — a tip is not actually included in your Uber fare.
Here’s a recent trip I took with Uber, for example. The receipt shows the fare breakdown, which includes a base fare, a cost associated with the distance, and a cost associated with time, as well as taxes and other fees:
As you can see, there’s no tip included in there. (One exception is UberTAXI, a service available in some cities — by default, a 20% gratuity is automatically included.)
Perhaps some of this confusion around Uber and tipping (there’s a lot — just Google it) stems from Uber’s own wording around the topic.
“You don’t need cash when you ride with Uber,” the company says on its website. “Once you arrive at your destination, your fare is automatically charged to your credit card on file — there’s no need to tip.”
Uber says that you don’t need to tip your driver. That may be the case, but it’s not because Uber includes the tip. In other words, if you don’t tip your driver, the driver isn’t getting one.
Uber likes to talk about how it’s a cashless service, and for obvious reasons the company certainly doesn’t want its drivers carrying around lots of cash. But Uber drivers aren’t prohibited from accepting cash tips, and people should feel free to tip if they’d like.
“With Uber there is no need to tip,” an Uber spokesperson said. “Once you arrive at your destination, your fare is automatically charged to your credit card on file, making for a cashless and seamless experience.”
Lyft, an Uber competitor, allows people to tip in the app. (In New York City, where I live, the two services are essentially interchangeable — many drivers here work for both Uber and Lyft.)
A Lyft spokesperson told Tech Insider that to date its drivers have been tipped nearly $80 million through Lyft’s app.
So should you tip? Well, that’s up to you.
But consider this: In many cities in the US, Lyft and Uber are in the midst of a price war, battling with each other by cutting fares in an attempt to attract customers. A Bloomberg story earlier this year cited IRS figures, and noted that the per-mile rate for Uber in Detroit following the holiday season wasn’t enough to cover gas and the car depreciation.
Low prices are, of course, great great for customers, but it also means that the driver isn’t earning as much from your trip.
Uber’s argument is that the cheaper it is, the more people use the service, so drivers end up making more.
And would you say no to a few dollars thrown your way if you were in the driver’s position?
So feel free to tip your Uber driver if you’d like. She or he will no doubt appreciate it. Plus, who knows? It may be a way to boost that rating of yours.