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How much does Uber cost?

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How much does Uber cost?

If you need to go somewhere urgently and are not in a mood to drive or if your car is giving you problems, don’t worry! All you need to do is open the Uber app on your smartphone and book a car. Your Uber car will be at your doorstep to take you to your destination in comfort. Uber has become a part of our lives and it is a brand whose name has become a part of our lexicon. If you have ever wondered how much does Uber cost and how does Uber decide its pricing, we have the answers for you. We have a guide that tells all you want to know about Uber and how the company prices its services.

The Uber success story

Uber is an American company that is in the business of providing ride services and ride sharing services. The San-Francisco based company operates in 63 countries across the world and offers its services in 785 metros in different cities. Travis Kalanick and Garett Camp founded the company in 2009. There is an interesting story on how the idea for starting Uber was conceived. Camp once had to hire a private driver paying $800 on New Year’s Eve. This experience motivated him to create a service that could provide cost-effective rides for customers. Uber started its services from 2011.

They launched their mobile app services in 2012, allowing customers to book an Uber ride using their smartphones. Initially, they offered luxury cars, but later on, launched UberX that allowed passengers to book low-cost rides. UberPool is a carpooling service that the company operates. They also offer a food delivery service called Uber Eats. Uber has more than 110 million users across the world using its services. They have captured the ride service market in the USA with a 60% market share. In 2018, they earned a revenue of $11.27 billion and have assets worth $23.88 billion.

Uber services

Uber collaborates with car owners across the world, who can add their cars to the Uber worldwide fleet. Anyone who meets requirements, including a valid driving license can partner with Uber after clearing a background check. They can use their own car or rent a car to use for Uber. All Uber drivers are considered as contractors offering services. They would be added onto the Uber platform and can start offering their services to the public. Uber has mechanisms to ensure safety for passengers.

Uber has a rating system where both the driver and the customer would rate each other. The idea is to identify drivers who don’t provide good services and have complaints from customers. Such drivers are removed from the Uber platform. In the same way, Uber expects its customers also to be well behaved and would remove customers would have low ratings. Uber’s success story has led the entry to many a competitor. Despite competition and stiff opposition from local taxis, Uber has been growing from strength to strength.

How it works?

Availing Uber’s services is simple. Both customers and drivers would have the Uber app installed on their phones. When you need an Uber, all you need to do is select the location you wish to travel, the app would take your home location automatically using GPS location search. You would then get an estimate of the price displayed. You can check out different options like Uber X or Uber Pool depending on your preferences. Uber uses a dynamic pricing model. The prices vary depending on the demand. This is known as surge pricing. Surge is when there is a great demand for cars during peak hours like work hoursand weekends.

The price applicable at that time of the day would be displayed. If it is acceptable, then you can confirm. The Uber app would scout for drivers nearby and allot one of them for you. Both you and the driver would get notifications about this. The driver would then come down to your location. You can get on board and complete the ride. Once the ride is complete, the price would be displayed. You can pay using various options, including cash and card. Once the transaction is complete, you would rate the driver based on the service provided. At the same time, the driver would also rate you on your behavior with the driver and other factors.

Uber Pricing

The Uber pricing model determines the answer to how much Uber costs. While there may be slight variations from country to country, the basic pricing model is the same. It involves the following formula (as explained in their website):

Uber price = ((Base price + Time rate + Distance rate) * Surge factor) + Toll + Tips+ any other fee + any local tax

Let us examine each of the factors that determine the Uber pricing for your ride.

  • Base price: This is the basic fee that is a fixed or flat fee. This covers the cost of picking up the customer.
  • Time rate: This is calculated based on the total time taken for the trip.
  • Distance rate: This is the total distance traveled from the time the trip commenced until the time the trip concluded.
  • Surge factor: This is the factor that determines surge pricing. For instance, during peak hours a surge factor of 1.5 may be applicable, which means you need to pay one and a half times the regular price.
  • Toll: This includes any local road tolls that have to be paid to the toll operator.
  • Tips: These are tips payable to the drivers. This is usually optional and left to the customer’s discretion.
  • Any other fee: In some places, a booking fee may be charged to cover the administrative expenses, including the cost of carrying out background check of the driver.
  • Local tax: Depending on the place of operation, there may be local taxes applicable.

All these factors put together determine the pricing and this is used by the app to calculate the price. This is the pricing model, with each of the factors varying depending upon the country and city where the service is provided. Each of the pricing factors is determined based on local conditions. For instance, in some countries, there may be local laws that govern the minimum fare. This would need to be factored by Uber. Similarly, taxes would vary. Surge pricing factor depends on the demand. If the demand is more, then surge pricing would be applicable. The fee also depends on the type of vehicle. Luxury vehicles would obviously have a higher fee. When you opt for ride sharing, you would be sharing the car with other passengers who would all be dropped to their destinations based on the shortest route as decided by the app. The charges would also be divided among all the passengers and hence the final price you pay would be less.

Payment

As a customer, you can pay using different methods:

  1. Cash
  2. Card – this includes credit card and debit card
  3. Online banking
  4. Digital payment and wallets like Google Pay, Apple Pay, etc.
  5. Gift cards offered by Uber
  6. Any other payment mode prevalent in the country/city of operation

Who benefits from Uber services?

The answer to this question is all the parties concerned benefit from services provided by Uber. Generally, 75% of the total price charged is given to the driver (excluding tolls and taxes that would be on actuals). Uber retains the remaining fee. The driver would retain any tips paid. Being a part of the Uber network is profitable for drivers. The amount they earn will usually not only cover their expenses but also help them make a profit. The more the number of rides, the higher they can earn. Surge pricing is beneficial for the driver as they can earn more during the time when there is a higher demand.

Uber services are advantageous for customers. In almost all places where Uber operates, their prices would be lesser than local taxi services. This makes it advantageous for customers. For regular users of Uber, the low pricing during most of the time would make up for surge pricing during peak times. Discounts are available for new customers for the first ride. Various promotional offers would be available for the benefit of customers. The biggest advantage for customers from Uber is convenience. Customers can travel wherever they want in a convenient way. This is the reason Uber is patronized by customers worldwide.

Uber would benefit as they get around 25% of the overall fee for every ride. Considering that there are thousands of rides happening worldwide at any time, it is a profitable venture for Uber. In most cases, their administrative fee would also be covered. The surge pricing would help the company make more money. Overall, it is a profitable business for Uber.

The Uber service is a win-win situation for all the parties involved. Drivers, customers, and the company would all benefit from the services provided.

Uber’s charges in different countries

The definitive answer to how much does Uber cost can be found out by a comparison of Uber services in different countries. This would help you get a general idea of how Uber prices its services. Uber has a price estimation tool that helps you understand how much Uber costs in different cities and different countries.

The following are prices for an Uber ride in cities across the world. The calculation is done for a ride of a distance of 5 km and is calculated using the US dollar for comparison.

  • Philippines – $1.33
  • India – $1.34
  • Russia – $1.66
  • Jordan – $1.76
  • Argentina – $1.84
  • Saudi Arabia – $2.30
  • Brazil – $2.39
  • South Africa – $3.29
  • Bahrain – $4.14
  • Greece – $4.67
  • Hong Kong – $6.65
  • Australia – $6.70
  • Canada – $7.31
  • New Zealand – $7.41
  • United Kingdom – $7.46
  • United States of America – $7.52
  • Germany – $8.92
  • France – $9.07
  • Netherlands – $10.07
  • Switzerland – $13.90

As can be seen from the above list, Uber prices vary from $1.33 to $13.90 from country to country. Even within a country, prices can vary from city to city. In a country like the US, prices vary a lot. For example, in New York, the base price of Uber is $2.55 with $0.35 charged per minute and $1.75 charged per mile. On the other hand, in Philadelphia, the base price would be $1.25 and the charges per minute and per mile would be $0.18 and $1.15 respectively. In Los Angeles, there is no base price and charges are based on a per mile price of $0.96 and per minute price of $0.15.

Uber costs thus differ from place to place, but in general, is cheaper than a taxi.

Finance

Global dividend payouts forecast to revive in 2021

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Global dividend payouts forecast to revive in 2021 1

By Joice Alves

LONDON (Reuters) – Global dividend payments could rebound by as much as 5% this year, a new report estimated on Monday, after the coronavirus caused the biggest slump in payouts since the financial crisis more than a decade ago.

Companies’ payouts to shareholders plunged more than 10% on an underlying basis in 2020 as one in five cut their dividends and one in eight cancelled them altogether.

A total of $220 billion worth of cuts were made between April and December, based on investment manager Janus Henderson’s Global Dividend Index. But there are signs companies are beginning to reinstate at least some of them.

Janus Henderson’s report warned that dividends could still fall 2% this year, in a worst-case scenario. But its best-case scenario sees 2021 dividends up 5% on a headline basis.

“It is quite likely we will see companies pay special dividends in 2021, utilising strong cash positions to make up some of the decline in distributions in 2020”.

Banking dividends will be likely to drive the rebound in payouts in 2021, the report said, after the European Central Bank and Bank of England eased blanket bans for lenders on dividends and buybacks. These were imposed during the first wave of the crisis to prepare for a potential increase in bad loans.

UK lenders Barclays and NatWest resumed payouts this month.

Last year, dividend bans meant banks cut or cancelled $70 billion of payments globally, according to the report.

But the overall global dividend cuts proved less dramatic than expected. In August, Janus Henderson had expected the virus to drive corporates to cut $400 billion worth of dividends, nearly double the eventual outcome.

A resilient fourth quarter of 2020 helped, said Janus Henderson. The likes of German car maker Volkswagen and Russia’s largest lender Sberbank restored payments.

Mining and oil companies cut dividends after a slump in commodity prices, while consumer discretionary companies also took a hit following lockdowns.

European dividends, not including Britain, fell by 28.4% on an underlying basis in 2020 to $171.6 billion. “This was the lowest total from Europe since at least 2009,” Janus Henderson said.

(GRAPHIC: Dividend cuts by region –

Global dividend payouts forecast to revive in 2021 2

In contrast, North American payouts rose 2.6% for the full year, setting a new record of $549 billion, the report said. Canada had the fewest dividend cuts anywhere in the world, the index showed.

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Former Bank of England Governor Carney joins board of digital payments company Stripe

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Former Bank of England Governor Carney joins board of digital payments company Stripe 3

By Kanishka Singh

(Reuters) – Mark Carney, former head of the UK and Canadian central banks, has joined the board of U.S. digital payments company Stripe Inc, days after the company was reported to be planning a primary funding round valuing it at over $100 billion.

“Regulated in multiple jurisdictions and partnering with several dozen financial institutions around the world, Stripe will benefit from Mark Carney’s extensive experience of global financial systems and governance”, the company said on Sunday, confirming a report by the Sunday Times newspaper.

Forbes magazine had reported on Wednesday that investors were valuing Stripe at a $115 billion valuation in secondary-market transactions.

A senior Stripe executive told Reuters in December that the company plans to expand across Asia, including in Southeast Asia, Japan, China and India.

The company offers products that allow merchants to accept digital payments from customers and a range of business banking services.

Stripe raised $600 million in April in an extension of a Series G round and was valued back then at $36 billion.

Consumer-facing fintechs have seen a boost to their businesses during the COVID-19 pandemic, as people have been staying at home to avoid catching the virus and have increasingly been managing their finances online.

Carney, who headed the Bank of England and the Bank of Canada, had a 13-year career at Wall Street bank Goldman Sachs Group Inc in its London, Tokyo, New York and Toronto offices.

He is the United Nations special envoy on climate action and finance.

(Reporting by Kanishka Singh in Bengaluru; Editing by William Mallard)

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The potential of Open Finance and the digitisation of tax records

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The potential of Open Finance and the digitisation of tax records 4

By Sudesh Sud, Founder of APARI 

The world is undergoing huge changes at the moment. Between coronavirus pushing the economy to the limit and a group of Redditors challenging the financial market hegemony, people are questioning the role of established institutions. If finance doesn’t work to enable the economy, businesses or individuals, then who is it for?

Before the digital revolution, financial experts were seen as a necessity. They knew how things worked, what everything meant, could provide good advice and were employed to sit at the heart of the action. Now, trading can be done by anyone online through established platforms, with a wealth of information available to hand.

Yet, as the 2008 financial crisis proved, established financial institutions have made themselves too big to fail. Simply tearing down the existing financial system would leave many ordinary people, along with businesses and government treasuries, in ruin.

However, as legendary futurologist, Buckminster Fuller, once said: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

Traditional banking models are already being upended by technology. Through Open Banking, challenger banks are able to connect services digitally, cutting inefficiencies and costs while speeding up transactions. Now, Open Finance is seeking to build on this model to connect financial services via technology, potentially making the existing financial model obsolete.

Just as Open Banking led to greater democratisation of money, Open Finance has the potential to transfer power back to individuals. Not only would this benefit society as a whole, but it would help minimise the boom-bust cycles that cripple entire economies. No individual would be too big to fail, and bailing people out would cost far less, having minimal impact on the economy overall.

With more information available to them, Open Finance businesses will be able to use technology to make better decisions instantly. Many people struggle to get onto the housing ladder due to a poor credit score, for example, yet they have been paying rent every month of their adult lives. Why, then, can they not access mortgages? A company called Credit Ladder is addressing this through Open Banking, reporting rent payments via challenger banks like Starling to credit agencies, helping good renters to access mortgages.

While it is still very early days for Open Finance, there seems to be an endless raft of possibilities to benefit individuals, businesses and national economies. Faster, more secure, and less risky access to credit can help grow the economy, transforming finance from something that benefits a few wealthy capitalists to something that enables growth in the real economy.

So how else could Open Finance benefit society?

Using Tax Information

Every working adult pays income tax. Some of us via self-assessment while others are enrolled in PAYE. Regardless, we all have tax records with a wealth of financial information that has been verified, at least in part, by HMRC.

This centralised repository of financial information could be put to better use, such as allowing credit reference agencies to better understand an individual’s risk profile or helping to prove income as part of a mortgage application. Unfortunately, HMRC is a black hole of information ‒ its sheer size and power sucks information in, but nothing comes back out again.

However, by Making Tax Digital (MTD), HMRC are effectively allowing individuals to keep validated tax records on the software of their choice. Software providers may then be able to use this information to enable certain aspects of Open Finance. The information doesn’t need to be protected by HMRC, it is the individual’s choice and responsibility over how to use their own information.

As MTD software develops, we will see it connected to Open Banking, allowing self-assessed taxpayers to connect their business account directly to the software, effectively getting their tax return completed for them by an AI program. They would simply check the details, add any adjustments, and click submit. HMRC would then validate the records, providing assurance for any financial institutions using that financial information.

More Growth, Lower Risk

With access to complete and validated financial information, lenders would be able to more quickly and accurately assess individual risk when considering a loan or mortgage application. This would greatly speed up the process of applying for a loan, whether for a business venture or property purchase, for example.

Take residential landlords, for example. They may own a few properties already, with equity coming out of their ears. If that landlord wants to obtain another property, they would need to get their accountant to assemble their financial information, complete a SA302, and send everything off to their mortgage advisors who would then validate the information before submitting the mortgage application.

The application can then take months to approve, slowing down the process and potentially leading to missed opportunities. Since property sales usually occur in a chain (the owner of the property you are purchasing is usually purchasing another property, and so on), these inefficiencies slow the process down for everyone and can have major impacts.

If, however, mortgage applicants could simply share validated financial/tax records, mortgage providers could use that information to make quick decisions with reduced risk. What’s more, applicants could share only relevant, high-level information, rather than expose their entire financial history.

Individual Risk Management

Currently, individuals can manage their credit score/risk profile via third party providers like Experian, Equifax and TransUnion. These credit reporting agencies use limited information, such as credit cards, store cards and loans to assess risk. Individuals need to understand what factors each agency uses in order to ‘game’ the system.

For example, someone who has always been careful with their money, kept to a strict budget and never taken out a loan or credit card will have a far worse credit rating than someone who regularly uses debt to finance their lifestyle. So, even though they may have amassed a good deal of savings, they cannot get a good deal on a loan or mortgage.

With Open Finance, these individuals would be able to quickly prove their earnings, spending, and savings, decreasing their risk profile in line with reality. Rather than crude measures of creditworthiness, financial institutions would be able to use accurate and validated information to make quick decisions based on realistic risk. This both transfers more power to individuals and contributes to faster growth while reducing overall risk.

As a centralised repository for validated financial information, MTD providers will be in a unique position to develop a two-sided marketplace for finance, allowing credit providers to match products to individuals’ risk profiles. When a customer needs a loan, credit card or mortgage, they can simply browse products for which they have already been approved, applying and receiving finance instantly.

Empowering PAYE Taxpayers

Currently, PAYE taxpayers have little, if any, visibility or control over their tax contributions. They will see the amount paid in tax and national insurance, but to claim any allowances requires them to submit a self-assessment tax return. For most PAYE taxpayers, this simply doesn’t seem worthwhile.

Yet, self-employed taxpayers can claim for things like travel to their place of work, a proportion of living expenses when working from home, even their lunch. These things are necessary for productive work yet, for PAYE taxpayers, come out of their already taxed income. Meanwhile, businesses tend to make use of every tax allowance available to them.

This imbalance could be rectified with Open Finance connected to tax software. As MTD becomes a validated system for self-assessed taxpayers, a new version could be developed for PAYE taxpayers, putting them in control of their tax and finances. Not only would they be able to benefit from Open Finance in the same way as self-assessed taxpayers, but they will also be able to claim for reasonable allowances. What’s more, HMRC/the Treasury/the government would be able to hold employers accountable for pay disparities and unreasonable tax avoidance.

Open Finance, then, has the power to speed up and reduce the cost of obtaining and providing finance. It would make the finance system fairer and most transparent while distributing financial power, and help to avoid the creation of too big to fail financial institutions and the boom-bust cycle that has become unfortunate features of modern capitalism.

Ultimately, Open Finance has the potential to help the UK and other nations recover from the seemingly unending series of crises that have plagued the early 21st century by allowing people to access finance quicker in order to grow their business and personal finances while reducing risk, inefficiencies, and costs.

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