Better Than Taxis?

Taxi vs Uber or Lyft: Why Ride-Sharing is Better than Ride-Hailing

For many people, ridesharing has become the preferred way of getting around a city and the success of the ridesharing industry has taken a huge chunk out of taxi services’ market share. 

Simply put, in the taxi vs Uber boxing match, ridesharing is threatening the taxi industry with a knockout punch. This dramatic change creates a challenge for taxi drivers while presenting an opportunity to rideshare drivers.

In New York City, the rideshare services provided by Uber and Lyft have dramatically affected the value of taxi medallions, the license required to operate a taxi within the city. Medallion prices peaked around $1 million dollars but have dropped to a third or less of that lofty number. Many taxi drivers used loans to purchase their medallions and they now find themselves horribly upside-down in these loans with their dreams of ever retiring gone up in smoke.

Unfortunately, the strong growth projected for the rideshare industry is going to impact taxi drivers negatively for years to come. Anyone considering a professional driving career should take a hard look at the taxi industry before making a commitment.

As part of comparing taxi vs Uber or Lyft rides, let’s take a look at these questions:

•    What’s the difference between ride-sharing and ride-hailing?
•    Is using Uber or Lyft better than taking a taxi?
•    What makes ride-sharing so popular among commuters?

Answering these questions will provide us insight into why ridesharing is having such an impact on the taxi industry.

Key Differences between Ride-Sharing and Ride-Hailing

In a nutshell, ride-sharing uses an internet-enabled application which allows passengers to schedule rides and for drivers to receive/accept ride requests. Ride-hailing involves a passenger physically flagging down a taxi driver to obtain a ride.


Getting Around
Ridesharing takes advantage of internet technology and smartphones to provide transportation services. There is no need to chase after cabs or elbow your way through a crowd to get a cab.

These ridesharing services are about providing better user experience, more comfort, and enhanced customer service to passengers.

The ridesharing app seeks out available drivers who are nearest to your specific location and allows one of those drivers to accept your ride request. This direct link to nearby drivers allows a passenger to obtain a ride in the fastest, most convenient way possible.

The app outlines the route to your destination to estimate the length of the ride as well as the fare.

Payment for the ride is made through the rideshare app which is convenient for the passenger and keeps the driver from having to handle cash. The app also allows a passenger to rate their driver on a 1-to-5 stars scale and then leave a tip if they desire.

The success of ridesharing has led to the development of different levels of rideshare services.

Both Uber and Lyft offer multiple types of rideshare services with each service type catering to a specific type of passengers.

For instance, UberBLACK and LyftLUX, which are quite similar to limo services, cater to passengers who prefer to ride in a luxury vehicle driven by a top driver.

UberPOOL and LyftLines cater to passengers who do not mind sharing their ride with different passengers who are headed in the same direction.

Drivers have to meet certain requirements before registering to provide the rideshare services like UberBLACK and LyftLUX. And obviously, they have to have a vehicle that meets Uber’s or Lyft’s guidelines for luxury vehicles.

Employment Status
As a rideshare driver, you work as an independent contractor, not a regular employee.

Independent contractors are regarded as business owners, which means they have more control over their work and schedule. It also means they have to take care of 100% of their Social Security and Medicare taxes come tax season (typically an employer pays half of these taxes and the employee pays the other half).


Getting Around
Ride-hailing is a form of public transport that allows passengers to go to a specific destination without making any stops like a bus or trolley makes.

Unlike ride-sharing where a passenger books a ride through an app, in ride-hailing a passenger must hail, wave, or call a taxi cab driver to obtain a ride.

As the passenger steps inside a taxi, they let the taxi driver know where to go.

Taxi drivers can accept cash or credit cards to settle the payment.

Generally, taxicabs offer only one type of ride, which is similar to an UberX or Lyft ride.
The vehicles used for taxi services are typically 4-door sedans and, quite often, the Toyota Prius.

Taxi passengers rarely ever share a ride with other passengers.

Employment Status
Just like rideshare drivers, most taxi drivers are self-employed even though they appear to be employees of the taxi firm. Quite often, the taxi driver rents or leases a vehicle from the taxi company.

In other cases, the taxi company hires the taxi drivers, provides the vehicles, and pays for the expenses related to the job. These taxi drivers are traditional employees rather than independent contractors.

Taxi services are being overtaken by the ridesharing industry. This is mostly occurring because the taxi industry has failed to adapt to technology.

The rise of internet-enabled services makes it much easier for commuters to book a ride. Standing on the curb waving-down taxis or calling taxi dispatchers on the phone is rapidly becoming a thing of the past.

Uber vs Taxi - Reasons Why Ride-Sharing Wins

Driver Behavior and Road Safety

Ride-sharing has the potential to be safer than ride-hailing because the ride-share companies are implementing the technology needed to monitor driver behavior while taxi companies are not. 

Monitoring could be used to get rid of unsafe drivers.

If they choose to, Uber and Lyft can monitor driver factors like speeding, erratic lane changing, and hard braking, and then take corrective action if needed. A driver who constantly exceeds the speed limit or drives recklessly might find themselves deactivated by the rideshare companies, although a warning would probably be issued first.

In 2016, Uber ran a pilot program using a mobile phone’s gyro-meter, GPS, and accelerometer to determine the speed and direction of a driver while driving. These tools can paint an accurate picture of an Uber driver’s driving behavior. It is reasonable to assume that this pilot program resulted in some type of actual monitoring program.

Even if the rideshare companies are not monitoring drivers’ behavior, drivers should be driving smoothly and obeying all traffic laws anyway. Failing to do so can cause passengers to feel unsafe and unsatisfied with their ride. Unhappy passengers are unlikely to tip, and they may leave bad reviews for the driver.

Taxi companies, on the other hand, do not utilize any technology to track their drivers’ driving performance and overall behavior. The taxi company has no way of knowing if a driver is speeding or driving erratically unless a passenger reports the behavior. It is unlikely that a taxi driver would be terminated based on a customer’s review, although a bunch of bad reviews might be cause for dismissal.

Background Checks and Licenses
Both taxi drivers and rideshare drivers have to go through complete background checks before accepting passengers.

Philadelphia taxi companies do not allow a convicted felon to apply as a cab driver if the felony occurred in the past five years - no DUIs are allowed in the past 3 years. In Chicago, on the other hand, an applicant must not be convicted of a "forcible felony" in the five years prior to applying as a cab driver.

New York, which is one of the largest markets for taxi services, has the strictest guidelines for cab drivers. Potential cabbies must go through a series of health checks and take a course on defensive driving. They also have to watch a video about sex trafficking to meet the city’s commercial driving standards.

Rideshare companies also conduct driver background checks. Uber and Lyft applicants are screened for felony convictions over the past 7 years.

Between taxi and ridesharing services, taxi services have more stringent background checks. This fact, however, does not mean that there are fewer incidents involving taxi drivers compared to rideshare drivers. Both industries have had issues with drivers who, in hindsight, should not have been allowed to transport passengers.

If you are applying as a rideshare driver, expect to go through stringent background checks whether you choose to drive for Uber or Lyft. The background checks will cover your driving history and criminal history including offenses like suspended licenses, drug-related charges, reckless driving charges, DUIs, and felony convictions.


The rideshare companies also offer passengers discounts and promos that reduce the cost of ridesharing.

According to Business Insider, Uber rates are much cheaper than taxicab rates across the country -especially if you use UberX, which is the company's basic rideshare service.

Carpooling or sharing rides, like you do with the UberPOOL service, keep fares down even more since you split the cost of a ridesharing trip with other people. Unless you are traveling with friends, you cannot enjoy the same options if you are taking a taxi ride.

There are cases when rideshare fares are more expensive than taxicab rates.

In some cities, taxi rates are surprisingly cheaper than rideshare rates. It all depends on the demand for ridesharing services.

If the demand for ridesharing in a certain city is high, Uber and Lyft fares will be higher in general.

Peak traffic hours, rush hours, holidays, and sporting events can cause the rideshare companies to implement surge pricing when rates rise based on demand. During surge pricing, rideshare rates may be equal to or higher than taxi cab rates.

Ridesharing shines when it comes to convenience.

Let’s face it, no one enjoys hailing a cab in the dead of the night or in the middle of rush hour.

If you call a cab company to book a ride there’s no way to tell when the cab will actually arrive. 

Ride-hailing is fine if there are many taxis available, but that’s not always the case – especially during rush-hour in a large city.

Ridesharing makes booking a ride much easier and more convenient for passengers.

Instead of standing on the curb to wave down a cab, just use your mobile device to book a ride - it’s that easy. The booking process takes just a few seconds and your ride is likely to arrive within 10 minutes, depending on the supply of rideshare drivers in your local area.

Using the rideshare app is easy; it will only take a minute or two to learn how to navigate through and use its features. All the information you need about your trip is provided within the app, including the total fare, the driver’s rating, the vehicle type, the vehicle license plate number, a picture of your driver, your ride’s arrival time, as well as the map route to your destination.

Wrap Up

So, in the Uber vs taxi contest, which service is better, ride-sharing or ride-hailing?

The user experience of ride-sharing is certainly better when compared to a regular taxi ride.

A basic rideshare trip is also easier on the wallet in most cases.

The rideshare app is simple to use and you can book a ride wherever you are.

With all of those positive features, it’s easy to understand why ride-sharing is replacing ride-hailing.

If you are after convenience, safety, and affordability, ridesharing is, hands down, the better service.