Smart Mobility

The Ride-Hailing Phenomenon: Under the Hood

A ride-hailing service is the next generation of taxi services. It provides travelers with convenient door-to-door transport, leveraging smart mobility platforms to connect drivers with passengers, and letting drivers use their personal vehicles.

In this article you'll learn about:

What Is Ride-Hailing?

In ride-hailing, a rider “hails” or hires a personal driver to take them to their exact destination. Although taxi services are an example of ride-hailing, the term usually refers to services that use online-enabled platforms and apps to connect passengers and local drivers, typically driving their personal vehicles.  

In ride-hailing, like in a traditional taxi service, drivers provide a ride for a fee. However, ride-hailing offers additional capabilities, such as efficient pricing tools, matching platforms, and rating systems.

Ride-Hailing VS Ride-Sharing: What Is The Difference?

What Is Ride-Sharing?

Ride-sharing (also known as real-time ride-sharing, instant ride-sharing, on-demand ride-sharing, or dynamic carpooling) organizes one-time shared rides at short notice. It also enables recurrent commuter trips and scheduled trips. Ride-sharing is a way to utilize empty seats in passenger cars, reducing transportation costs and fuel usage. It can service areas where public transit systems are sparse or do not exist.

Ride-Sharing VS Ride-Hailing

Shared trips: Involves the grouping of travelers headed to a similar destination.Personalized trips: Users request a ride in real-time via a smartphone application.
Makes stops during the route.Doesn’t make stops during the route.
A way to save on travel costs as passengers can split the cost of travel with the driver.Provides services for a profit. Payment is automatically charged to the credit card of the passenger. Typically the driver and ride-hailing operator share income from the ride.
Brings together riders and independent drivers.A third party that connects passengers with drivers.

For example, BlaBlaCar is a UK ride-sharing service that connects drivers with empty seats with individuals who need a ride. Companies like Uber and Lyft offer both ride-hailing and ride-sharing services but are more commonly used for ride-hailing.

Why Are Ride-Hailing Apps So Popular?

Ride-hailing applications use a combination of user-friendly features and scheduling software. Users can book rides in advance, choose their preferences, and provide feedback by rating their experience. Smartphone-based ride-hailing brings drivers directly to the origin of the customer and takes the customer to their exact destination.

App-based ride-hailing efficiently matches customers with routes, so drivers can pick up riders more frequently. This reduces the time the driver spends in their vehicle without a passenger. Drivers who transport passengers more frequently earn more revenue-per-mile, lowering the cost for the rider, attracting more riders, and creating better utilization of vehicles.

Ride-Hailing Platform Components

Ride-hailing apps include three mobile applications:

  • Driver app: Drivers provide transport services and communicate with their customers.
  • Rider app: Riders can book and track journeys and select vehicle types.
  • Dispatch system: A real-time software platform that automates scheduling and routing of vehicles using location and traffic data. Taxi or ride-hailing dispatch systems connect drivers with riders via their mobile phones.

Driver App Features

  • Earnings tracker: Tracks driver earnings over time. Drivers can use this information to see if working for a particular service is worthwhile. They can use this app together with bookkeeping software to import their earnings and keep a record of mileage, gas payment, tolls, etc.
  • Gas station locator: Provides the quickest route to the nearest gas station, and shows fuel prices.
  • Music player: Plays music, adds favorite radio stations, and finds new artists, without requiring drivers to use multiple applications.
  • Route optimization: Displays the most efficient route so drivers can reach their destination quickly. Drivers can add their most-used routes.  
  • Availability button: Allows drivers to confirm or deny a ride based on their availability. Drivers can mark their status as online or offline, and use the app to accept and complete a ride.  
  • Rider review: Provides a passenger’s ratings and reviews. Drivers can check this information before accepting a ride request.
  • Driver destinations: Provides the option to accept passengers while drivers travel to their preferred destination. Drivers can use this feature when, for example, they are on their way home.  

Rider App Features

  • Schedule a ride: Allows passengers to book a ride, select pickup location, destination, level of service, and pick up time and date. Once complete, the passenger receives confirmation of their booking. The app provides details of their driver, and passengers can track their ride.
  • Split charges: Automatically divides fares evenly between commuters using a fare-splitting feature. This is useful as ride-hailing app users often travel in groups and split the bill. Group travel can save time, cost, and fuel.
  • Favorite destinations: Bookmarks or saves frequent destinations like a workplace, home, or favorite restaurant.
  • Sharing ETA and status: Tracks a ride after passengers book. After the driver has accepted the ride request, passengers can track the ride as it approaches. They can also share their trip status and estimated time of arrival (ETA) with family, friends, on social networks, and via email. Recipients receive information such as driver’s name, location on the map, and vehicle information.
  • Driver-rider chats: Drivers and passengers can communicate via the app without having to use other apps or phone calls. In some apps, messages sent by the user are automatically read out-loud to the driver, so the driver doesn’t have to pick up their phone, allowing the driver to stay focused on the road.  
  • Suitable payment methods: Provides payment method choices such as credit card payment, cash, and payment platforms like Braintree, PayPal, or Stripe. Most apps also allow passengers to pay via e-wallets like Apple Pay.
  • Adding extra stops: Passengers sometimes need to stop at several points along the route. The rider app lets them adjust their routes while on the move or in advance when the ride is in progress.
  • Driver rating: Rates drivers so users can read feedback and reviews of their driver before they confirm their booking. Passengers can also rate their ride experience after each trip.
  • Panic button: Used in cases of emergencies and accidents. If the passenger is in danger, they can press the panic button, which sends a message to the nearest police station, the ride-hailing service authorities, and family members.

Dispatch System Features

  • Fleet dispatching: Automatic management of vehicle fleets, including vehicle utilization, fuel usage, driver performance, and driver payments.
  • Administration panel: Displays vehicle details and information like revenue statistics and revenue sharing. The admin panel may provide scheduling, reservation, payment, and dispatch options. Dispatchers can use the dashboard to track drivers in real-time on a map, view recent and urgent jobs, add new jobs, and dispatch existing ones.  
  • Matching supply and demand: Algorithms automatically allocate work to the most suited driver. The algorithm uses information such as the longest wait time, nearest to pick-up, type of vehicle, time of day, day of the week, upcoming ride, and priority accounts.
  • Booking frequency optimization: Supports real-time location-based routing and mapping to ensure each driver can book the maximum number of rides.
  • Assured passenger safety: Both the driver and the customer are monitored. Driver and rider apps have advanced monitoring functionality, designed for the taxi industry, and monitoring data feeds back to the dispatch system.

Learn more about HERE Mobility's dispatch software

Ride-Hailing: Again Digital Is Democratizing Society

Just like Facebook, Google, and Wikipedia shifted power from traditional publishers to the broader public and allowed just about anyone to voice an opinion and interpret global events, ride-hailing is democratizing the transport industry. Heavily regulated taxi services were once the only way to pay for a ride, and today millions of independent drivers are using online platforms to deliver transport services to passengers.

Again power is shifting from a group of narrow commercial interests to a broader public, providing everyone with access to a more sophisticated, optimized, and cost-effective transportation option.