Ola Extends Zero Commission Model To Cab Drivers: Report

Ride-hailing platform Ola has reportedly rolled out a software-as-a-service (SaaS)-based zero commission model for its cab drivers.

This comes at a time when Ola’s rivals Rapido and Namma Yatri also introduced SaaS-based models for their cab drivers last year. 

As per a Mint report, citing sources close to the matter, the company will now allow drivers to retain 100% of their earnings. In return, the drivers will pay a fixed daily or monthly subscription fee to Ola.

Inc42 has reached out to Ola for comments on the development. The story will be updated based on its response.

This comes on the back of Ola introducing this model for its auto drivers back in 2024. 

With the expansion of this model to its cab segment, Ola is trying to retain its drivers amid rapidly increasing competition in the ride-hailing sector.

India’s Ride-Hailing Race

Ola, which was once the market leader in the Indian ride-hailing market, now faces extreme competition with the emergence of relatively new players. 

With Rapido, Namma Yatri and Uber piloting new features and segments, Ola is trying to keep up with the pace. 

Ola has been facing backlash from its drivers due to high commission charges. In February, Chennai-based auto and cab drivers union announced a boycott of Ola and Uber over high commissions charged on daily rides.

Similarly, last year auto and taxi drivers in Delhi NCR launched a two-day strike (to protest against app-based cab services like Ola for allegedly dominating the transportation sector, resulting in  reduced income and customers of traditional drivers.

Notably, Ola used to charge a 15-20% commission fee on the total fair earned by the cab drivers during each ride. 

The absence of this fee gave an edge to ride-hailing apps like Namma Yatri and Rapido. Drivers prefer the subscription-based model, which helps them earn more and keep 100% of their earnings.

Besides, rolling out this model may also help Ola in reducing its tax liabilities. Last year, the Authority for Advance Rulings (AAR) Karnataka exempted Namma Yatri from paying Goods and Services tax (GST)  due to its model which only connects customers to the drivers. 

Whereas, Ola pays 5% GST on the commission income earned through drivers. However, AAR Karnataka ruled that Rapido is still liable to pay tax even after adopting the subscription-based model as it works as an ecommerce enabler. 

Talking on the expansion front, Ola started offering grocery delivery services to its customers via the government-backed Open Network for Digital Commerce (ONDC) last year. Later in December, the ride-hailing giant also piloted a 10-minute grocery delivery service in select pin codes in Bengaluru.

Now, Rapido is also in discussions with restaurant partners to add food delivery services on its platform to challenge the duopoly held by foodtech majors Zomato and Swiggy.