Kakao Mobility to Lower Franchise Fees to 'Below 3%'

Kakao Mobility is pushing to lower the actual commission rate for franchise taxis (Kakao T Blue) from the current maximum of 5% to below 3%.

On the 13th, Kakao Mobility held consecutive meetings with four taxi industry organizations (the National Taxi Labor Union Federation, the National Democratic Taxi Labor Union, the National Private Taxi Transport Business Association Federation, and the National Taxi Transport Business Association Federation), as well as representatives from the franchise taxi industry (Korea T Blue Council), to discuss solutions to platform taxi commission issues and monopoly controversies.

[Image source=Yonhap News]

First, they discussed preparing specific improvement plans regarding the commission system and levels that could reduce the burden on franchise taxi drivers. Kakao Mobility decided to reconsider the franchise taxi business from scratch and introduce a new service with a lowered commission rate. Since it is practically difficult to overhaul the existing various franchise systems, which currently involve more than 50,000 drivers, they agreed that quickly preparing a new service with a lower commission rate is the fastest way to minimize the burden on franchise drivers.

Reflecting the demands of the taxi industry, the commission rate for the newly launched franchise service will be actively considered to be below 3%. Currently, Kakao Mobility takes 20% of the operating revenue as a franchise commission and returns about 15-17% to drivers under the name of partnerships (data utilization and advertising fees). The plan is to reduce the current maximum actual commission of 5% to around 3%. Kakao Mobility plans to prepare a new franchise service product with minimized franchise fees by the end of the year and will also guarantee existing franchise taxi participants the option to switch to the new franchise taxi service.

Taxi organizations also requested fair dispatching regarding allegations of 'call steering,' demanding non-discriminatory dispatching between franchise taxis and regular call taxis, and urged Kakao Mobility to propose proactive improvement measures rather than engage in legal disputes. In response, Kakao Mobility presented plans to establish a new taxi matching system by the end of the year. They explained that they will consider simplifying the complex matching algorithm. Ryu Geung-seon, CEO of Kakao Mobility, said, "We will promptly prepare measures to increase the transparency of the matching system and gain social consensus."