Why Ride-Hailing Apps Are Adopting The No-Commission Model

The latest transformation — of ride-hailing platforms moving toward a no-commission model — marks another critical turning point in urban transportation.

What began as an experiment by early adopters like Rapido, has become a defining trend. More platforms, especially the bigger ones, are hitching their bandwagons to the disrupter, realising that its model of allowing drivers to keep their earnings while charging only a minimal platform fee is more sustainable and frictionless. They have realised that mimicking a good idea — even if late — is better than resisting change.

Changing Economics

For years, ride-hailing platforms relied on a commission-based system, deducting a percentage from each fare to generate revenue. While this model worked well in the early stages of the industry, the reality on the ground has changed.

Vehicles such as bikes and auto-rickshaws operate on thin margins, where deductions of even small commissions significantly impact driver earnings. This led to the emergence of the no-commission or low-fee model. By ensuring that drivers retain a larger share of their earnings, platforms have improved retention, increased service availability, and made fares more competitive for customers.

This shift also reduces the long-standing friction between drivers and platforms, addressing concerns about earnings transparency and unpredictable commission deductions.

At first, the industry was sceptical. Could platforms sustain a business model that does not rely on commissions? Would they be able to generate revenue through other means?

With early adopters of this model demonstrating better driver engagement and more substantial market penetration, others had little choice but to follow.

From Skepticism To Imitation

The ride-hailing industry has continuously evolved through rapid adaptation. When one platform introduces a feature that gains traction, others quickly follow.

The no-commission model is no exception. Initially dismissed by competitors, it has gained widespread attention, with multiple platforms piloting similar structures or exploring alternative monetisation strategies to remain competitive.

This shift highlights a fundamental reality of the mobility sector — innovation is rarely the monopoly of a single player. While being first to market offers an advantage, long-term success often depends on how quickly others recognise a winning strategy and implement it effectively.

In case of ride-hailing, platforms that once relied heavily on commission cuts are now scrambling to adopt a model they had previously ignored.

The transition to this new model also signals a broader change in industry priorities. Initially, commission-based structures were seen as the most reliable way for platforms to generate revenue. However, growing dissatisfaction among drivers and increasingly price-sensitive passengers made this model difficult to sustain.

With rising fuel costs and inflation impacting gig workers, platforms have had to reassess their approach. The question now is not whether the no-commission model works but how to scale it effectively.

Some platforms have introduced subscription-based services, where drivers pay a fixed platform fee rather than sharing a percentage of each fare. Others invest in financial services tailored for gig workers, such as micro-loans, insurance, and fuel credit partnerships.

The Road Ahead

Despite its advantages, transitioning to a no-commission or low-fee system comes with challenges. Platforms must still generate revenue, invest in technology, and ensure regulatory compliance. This requires new monetisation strategies, such as rider subscription plans, advertising partnerships or premium ride options.

Regulatory uncertainty is another key concern. While some cities have embraced these changes to make mobility more affordable and efficient, others remain hesitant, citing concerns over safety, licensing, and broader policy frameworks.

As more platforms shift toward driver-friendly models, there is a growing need for more explicit regulations that balance the interests of gig workers, passengers, and operators.

The ride-hailing industry was slow to adopt driver-friendly models, but this highlights an important lesson: Being flexible with regulations is more important than rushing them. As cities move beyond commission-based systems, policies should focus on building adaptable rules rather than strict guidelines. This will help innovation and fairness go hand in hand on busy streets.

Finding A Balance

At the same time, governments can create a more balanced ride-hailing market by introducing tiered subscription plans, mixed pricing models, and safety measures that work across different platforms. The goal is to support both drivers and passengers so they benefit from each other. As tech platforms become more integrated with public services, policies must remain flexible to keep up with new business ideas and the changing needs of society.

Additionally, as more companies adopt the no-commission model, competition will intensify. The challenge now is not just about pricing but also about service differentiation. Features like dynamic pricing, real-time demand-supply matching, and superior driver training will become crucial in determining which platforms can sustain long-term dominance.

Lesson In Late Adoption

Despite these challenges, this shift significantly transforms the ride-hailing industry. The focus is no longer just on platform profitability. Instead, the goal is to create a more balanced ecosystem where drivers earn fairly, passengers pay reasonable fares, and platforms find sustainable ways to operate.

The ongoing shift in ride-hailing pricing models serves as a clear reminder — sometimes, recognising and adopting a good idea, even belatedly, is a more intelligent move than resisting it.

This isn’t just about a single company’s strategy or a short-term pricing experiment. It reflects the broader evolution of urban mobility. And in this fast-changing sector, being late to the party isn’t necessarily a disadvantage — so long as you show up with the right strategy.

(The writer is a senior journalist who was earlier Business Editor at The Federal and associate editor with Hindu Businessline)