No More Commissions for Street-Hailed Taxi Passengers: "Boost for Earnings" vs "Return of Passenger Selection"

"These days, there are fewer customers hailing taxis on the street, but near bus terminals or train stations, there are still quite a few people who flag down taxis directly. Looking at it on a monthly basis, the reduced commission could add up to a significant amount."

On May 11, the first day of the implementation of the so-called "Taxi Street-Hailing Commission Ban Act," a taxi driver in his 50s, surnamed Kim, whom we met in Yeongdeungpo-gu, Seoul, shared this reaction. He operates a Kakao Mobility-affiliated taxi and has been paying 2.8% of his total earnings in commission to the platform. He expressed anticipation about the new rule that exempts him from paying commission for passengers he picks up directly on the street starting today.

On the 14th, the second day of the Seoul city bus strike, citizens are using taxis at the Seoul Station taxi stand. January 14, 2026 Photo by Yoon Dongju

He said, "I always thought it was unfair that I had to pay a commission even for customers who didn't use the taxi app, but since I couldn't avoid using the app altogether, I had no other choice but to pay the commission."

The partial amendment to the Passenger Transport Service Act, commonly referred to as the "Taxi Street-Hailing Commission Ban Act," took effect on this day. It comes roughly three months after the amendment passed the National Assembly on January 29. As a result, from today, platform-affiliated taxis are no longer required to pay a commission if they turn off the call function and pick up passengers on the street, so-called "street-hailing." The same applies if a franchise taxi driver picks up a passenger through another platform like Uber.

The taxi industry expressed hope that not having to pay commissions on street-hailing would help improve profitability. Currently, the platform commission rate charged to franchise taxi drivers is at least 2.8%, with an average of 3.3%. Assuming a taxi driver's monthly revenue is 4.5 million won, and that 20% of this is generated from street-hailing, the monthly commission savings alone would amount to about 30,000 won.

Mobility platform companies have updated their systems to ensure no commission is charged on street-hailing rides for franchise taxi drivers in line with the new law, and taxi franchise headquarters have also renewed their contracts with drivers to comply with the revised law.

However, there are concerns that this could negatively impact taxi users. Taxi drivers may prioritize street-hailing over app-based calls for higher profitability. In such cases, there are worries that the practice of "choosing passengers," which was common before taxi apps were adopted, could resurface. For franchise taxi drivers, street-hailing may be more profitable than accepting app calls, as they can selectively pick up long-distance passengers during high-demand nighttime hours. Currently, taxi apps prevent drivers from refusing rides by hiding the passenger's destination or enforcing mandatory dispatch for paid calls, but if franchise taxi drivers stop using the app, these measures become meaningless.

There are also concerns that this could lead to a decline in the quality of taxi services and a decrease in revenue for mobility platforms. Franchise taxi operations encompass not only taxi dispatching but also service quality and vehicle maintenance, and the new law limits the platform's role to just dispatching. An industry insider commented, "With the law revision, platforms now have less incentive to invest in qualitative factors such as service quality and vehicle cleanliness."

Accordingly, there are calls for countermeasures against side effects such as passenger selection that may arise after the law goes into effect. Kim Yoonduk, Minister of Land, Infrastructure and Transport, acknowledged during a National Assembly Legislation and Judiciary Committee inquiry in January that the passage of the amendment could cause inconvenience for passengers during commuting hours, stating, "I believe there are concerns that require separate countermeasures."

There are also calls for a flexible fare system that matches demand in order to reduce taxi drivers' selective boarding practices. A mobility industry representative said, "Selective boarding occurs because supply is insufficient relative to taxi demand, so it is necessary to institutionalize policies, such as flexible fare systems, that can provide drivers with compensation."

This content was produced with the assistance of AI translation services.