Lyft is charging riders wait time fees — but drivers aren’t reaping the rewards

Lyft yet started charging riders hold clip fees successful December, but drivers are complaining those fees aren’t making it into their wallets. At least, not yet.

Lyft’s hold clip fees, aliases nan charges that passengers incur if a driver has to hold for them upon pickup, footwear successful 2 minutes aft on-time presence for modular fares and 5 minutes aft Black and Black XL. The fees are charged connected a per-minute basis.

Drivers successful respective U.S. markets who person posted connected Reddit and who person talked to TechCrunch opportunity they’ve yet to spot those charges extremity up successful their accounts. Lyft told TechCrunch nan hold isn’t intentional and that drivers successful definite markets were successful truth receiving those fees. The remainder should spot them show up successful nan coming weeks, according to Lyft.

Lyft ne'er formally announced nan caller hold times; nan institution conscionable softly implemented them and updated their website and ne'er promised that nan money would spell to drivers. That hasn’t assuaged drivers who are angry astir getting “Gryfted,” a word immoderate are utilizing connected a Reddit forum to picture their views connected losing retired connected nan other money.

Drivers reason accrued rider fees person go nan norm successful nan manufacture successful guidance to macroeconomic trends. But that hasn’t ever meant nan other fees person been passed connected to drivers.

Back successful March 2022, erstwhile Russia’s penetration of Ukraine caused state prices to skyrocket, some Lyft and Uber added impermanent surcharges to rides to thief screen nan costs of fuel. In that case, each of that money went to nan drivers, who were grappling pinch higher state prices. However, erstwhile Lyft was struggling to woody pinch rising costs of driver security successful October, the institution accrued nan work fees that riders successful nan U.S. salary for each thrust and pocketed nan money.

Drivers who said to TechCrunch said nan hold clip fees should spell to them, not to Lyft, because they suffer precious money-making minutes each clip a rider is late.

Drivers besides said they expected nan 2 rival ride-hailing companies to travel akin playbooks. Uber gives its hold clip fees to drivers, according to a fewer drivers who said to TechCrunch. They said it’s “pennies,” and that Uber really conscionable accrued nan grace play for tardy riders from 5 minutes to 7 minutes, but it’s something.

Lyft told TechCrunch that successful markets pinch “upfront thrust information,” drivers do person hold clip salary now. (Upfront thrust accusation intends drivers tin spot wherever nan travel is going earlier accepting a ride. Regions wherever this is progressive see New York City, Washington state, Portland, Toronto and Vancouver.) Every different marketplace is considered an “upfront pay” region, and drivers successful those regions will beryllium seeing hold clip salary successful their wallets “within nan coming weeks,” Lyft spokesperson Katie Kim told TechCrunch.

Kim did not corroborate whether Lyft would retroactively salary riders for hold clip fees incurred complete nan past 2 months.

Lyft introduced upfront pay past October, a fewer months aft Uber launched a akin characteristic successful July. The characteristic lets drivers spot thrust accusation and what they’ll gain earlier accepting a ride. While nan companies person marketed upfront salary to drivers arsenic a transparency tool, immoderate drivers opportunity it’s conscionable a disguised salary cut. Drivers who opportunity their net person been slashed since nan characteristic was introduced person guessed that nan upfront salary exemplary is really designed arsenic an auction, wherever Lyft aliases Uber show a thrust astatine nan lowest imaginable fare and spot which driver will return nan ride.

Some drivers person experimented pinch nan strategy to spot if they could crippled it: “I declined a petition that was 28 miles (34 minutes) for $10.26 and astir 40 seconds later nan aforesaid thrust was $21.74,” wrote 1 Redditer. Others person called for wide action from drivers to contradict rides successful unison until nan upfront salary costs reflected what they deem to beryllium a reasonable fare.

Uber and Lyft some denied nan accusation that upfront salary is designed to connection nan lowest fare to drivers. Both companies besides said that driver net are precocious astatine astir $35 per hr of engaged time. Note that engaged clip intends nan clip a driver is driving to prime up aliases driblet disconnected a rider and doesn’t see nan clip spent driving astir and waiting for a gig. Many drivers opportunity this intends engaged clip is not reflective of a existent hourly wage.

The creation of driver retention

Uber and Lyft person only conscionable emerged from a driver shortage situation that packed connected much expenses.

In nan 4th fourth of 2022, Lyft reported that it has nan astir progressive drivers connected its web successful 3 years, and drivers spent much clip driving than they did successful Q3 2022 aliases successful Q4 2021. Getting drivers to travel backmost connected nan level aft COVID-19 costs Lyft and Uber hundreds of millions of dollars successful incentives, which took a chunk retired of their margins and caused their stock prices to plummet.

Today, nan ride-hailing companies look to person a small much power. Drivers are coming backmost to nan level not because of incentives. A looming recession mixed pinch ostentation that has made buying groceries arsenic costly arsenic going retired to meal has motivated drivers to get backmost connected nan app.

That gives Lyft immoderate wiggle room connected really it pays its drivers successful nan short term. The mobility is, is it worthy nan consequence of losing drivers to Uber complete nan agelong term?

“Decreasing incentives could use Uber if drivers look to them for higher salary on pinch nan accrued earning opportunities Uber offers pinch delivery,” Nicholas Cauley, expert astatine Third Bridge, a world finance investigation firm, told TechCrunch. “Our experts person noted nan duopoly betwixt Uber and Lyft keeps some players successful check, yet a use to riders, drivers and nan rideshare industry. If 1 raises pricing, nan different benefits. If 1 lowers driver incentives, nan different benefits. One subordinate cannot make melodramatic changes distant from nan marketplace equilibrium without nan use of nan other.”

It’s that tit-for-tat that caused Lyft shares to driblet aft reporting fourth-quarter 2022 earnings. Lyft lowered expectations for gross successful nan first quarter, successful portion because nan institution expects mediocre upwind to impact demand. However, Lyft besides had to somewhat trim pricing successful bid “to stay competitory pinch nan industry” — “the industry” being Uber, Lyft’s oft-described “big brother.” For its part, Uber posted beardown net and investors reacted favorably.