Ola Implements Zero Percent Commission for Subscription-based Model
In response to increasing competition, ride-hailing company Ola has implemented a zero percent commission arrangement for its taxi drivers, signaling a move towards a subscription-based business model.
The action comes after more recent firms like Rapido and Namma Yatri unveiled Software-as-a-Service (SaaS)-style business models that let drivers keep all of their profits in return for a set daily or monthly platform fee.
This approach was first used for autorickshaws by Uber and Ola; Uber launched it earlier this year, and Ola followed suit in April 2024.
Given that Rapido is branching out into food delivery and other services beyond mobility, Ola's move to apply the model to its taxi business seems to be an attempt to keep drivers and maintain its competitiveness.
“This is a significant win for drivers, who generally prefer a fixed subscription model that lets them retain 100 percent of their fares, rather than dealing with unpredictable commissions” says Nikhil Dhaka, vice president at Primus Partners.
“It could also help reduce ride cancellations and driver churn. However, the impact on consumers remains to be seen”, adds Nikhil.
A post on Ola's official Facebook page states that the firm is currently selling a 30-day pass for Rs.67 each day.
With this pass, drivers have complete access to the platform and are not charged a commission for rides.
Ola's GST responsibilities, namely the five percent tax imposed on rides facilitated by aggregators, may be impacted by its transition to a subscription-based business model.
The Karnataka AAR has exempted SaaS platforms like Namma Yatri from GST, while Rapido and other platforms are still subject to the tax since they are categorized as e-commerce operators.
Uber contested this discrepancy last year before the GST Council and the Karnataka Authority for Advance Rulings, claiming that it leads to unfair competition and unclear interpretations of tax regulations.
Additionally, Ola Krutrim has introduced Kruti, an agentic AI helper that can do more than just answer questions.
In addition to being able to book taxis, buy food, pay bills, create images, and conduct research, the assistant also has extra features like read-aloud responses and personalization.
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Kruti is a refined version of Krutrim's previous public beta chatbot that can be used for text and voice input, maintains conversational context, and adapts vocabulary, tone, and duration to user preferences.