April 19, 2024

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[THE INVESTOR] Kakao Taxi, South Korea’s most widely-used taxi hailing app, on April 10 added a “paid option” that offers users faster pickup services. The option will cost an extra 1,000 won on top of the taxi fare, according to the company.

The paid option, dubbed “smart call,” leverages Kakao’s artificial intelligence and big data analysis engines to direct a particular ride request to taxi drivers who are most likely to accept the call based on previous pickup history and driving patterns. 

The 1,000 won “smart call” fee will be immediately charged to the user’s credit card registered to the app. Users pay for the ride fare separately at the end of the trip.

It is designed to help users fetch cab rides faster than when using the “regular call option,” currently available free of charge.

The addition of the new feature came a month after Kakao announced plans to add two types of "paid options" that would grant customers faster pickup, with each option tentatively priced at 2,000 won and 5,000 won each.

The plan instantly triggered concern for its potential to cause a hike in taxi fares, as it could motivate taxi drivers to selectively pick up passengers paying the extra fee, particularly during late-night hours.

Amid growing concern, the Transport Ministry informed Kakao that the planned option is viewed the same as the existing “call taxi” services where customers pay a cab driver an extra fee for a pickup.

The ministry said that Kakao should follow local regulations that set “call fees” at 1,000 won, putting a cap on extra fees that Kakao had pursued to make profit from its platform.

Kakao Taxi, offered via the Kakao T app, currently dominates Korea’s taxi-hailing business. It has more than 18 million subscribers in Korea. Around 96 percent of the country’s certified taxi drivers are registered with the app.

By Sohn Ji-young/The Korea Herald (jys@heraldcorp.com)