[NEWS IN FOCUS] Kakao Taxi feature could open door to Korean tipping culture

Industry

Published: 14 Aug. 2023, 15:16 Updated: 14 Aug. 2023, 18:57

[NEWS IN FOCUS] Kakao Taxi feature could open door to Korean tipping culture

A Kakao Taxi vehicle in Seoul on Sept. 14, 2021 [YONHAP]

In Korea, you do not expect a tip for simply doing your job well. So when a 62-year-old cab driver received a tip of 935 won ($0.70) through the Kakao Taxi app, it proved a pleasant surprise.

“It felt nice to know that someone had tipped me,” the taxi driver known by his surname Yim told the reporter. “I usually work during the day and there’s no extra commission fee I can earn compared to drivers who work night shifts. Although the amount of tipping is small, it’s always great to earn a little extra whenever I can.”

Tipping is an uncommon practice in Korea as the original price is seen to cover all services offered to consumers. This is why a new pilot service that allows tipping is stirring the pot after its debut on July 19. Users of Kakao Mobility’s cab-hailing service, Kakao Taxi, can now tip drivers between 1,000 and 2,000 won if they are particularly satisfied with the driver’s performance.

If users give the full five stars after their trip, a pop-up screen appears where users may choose to tip their drivers from three price selections: 1,000 won, 1,500 won or 2,000 won.

The tipping service is not applied to general taxis but to premium options such as Kakao Blue, Kakao Venti, Kakao Deluxe and Kakao Black. Users must pay an extra fee of up to 6,000 won, plus the distance covered, for such services.

A 29-year-old surnamed Jun, who recently moved to Ohio in the United States, worries that Kakao Mobility’s new service may spark the spread of tipping culture in Korea.

“I don’t know why we [the consumers] have to pay an additional fee when we are already paying for the services we use,” she said. “It’s up to the employers to pay their employees, so I don’t know why they are pushing that responsibility onto their customers. I’ve only recently moved to the United States, but I find their tipping culture very inconvenient and financially burdensome. They say it is up to consumers when it comes to tipping, but it’s very difficult not to give any tip at all once it is mentioned. I hate to think that such a culture would settle in Korea too.”

Kakao Mobility is not the only such service to implement the tipping system but is the one to receive the most criticism as it occupies some 95 percent of the entire taxi-hailing service in the country, according to Fair Trade Commission data in December 2021.

Among taxi-hailing apps, Kakao Taxi’s monthly active users amount to 11.36 million, much higher than second-placed service UT with 516,109, followed by Tmoney onda with 159,433.

A pop-up screen on the Kakao Taxi app appears where users can choose to tip the driver if they have given the full five stars on the driver's performance. [SCREEN CAPTURE]

Another Kakao Blue taxi driver is skeptical about whether the tipping service would even be widely used.

“I’ve received a tip once since the service went into effect last month,” the driver surnamed Kang told the reporter. “Sure, there’s no harm in receiving a tip, it’s even great on the driver’s part who is at the receiving end of it, but I don’t think such a system is necessary when users, especially young people nowadays, would feel pressurized to tip.”

Although not prevalent, tipping culture does exist within the taxi industry, Kang said.

“Older people, such as seniors whose daughters or sons call the taxi for them, often leave some cash as their way of expressing gratitude,” he said. “In the past, before all forms of payment transited to cards, a lot of people used to say ‘keep the change’ when they paid in cash. Similarly, foreigners or tourists who take cabs still leave tips this way, especially Chinese users. They always leave a few bills in my experience.”

According to Kakao Mobility, the service was not implemented with the purpose of becoming a norm.

“The matter was first brought up last year during meetings between the operator and franchise taxi unions,” a Kakao Mobility spokesperson said. “We host them several times a year to hear their voices on improvements that could be made to the service. Users have to go through the process of giving full marks and then giving their consent [to the tip]. But only a handful of users go through the process of rating after they get out of the vehicle.

“The main purpose of this service is to create a virtuous cycle between users and drivers. It is for users to express their gratitude for high-quality service and for drivers to have a motivating factor to perform their services well,” added the spokesperson.

Kakao Mobility does not take any profit from the tips, it said.

“Except for the credit card fee and the fee to convert the tip into cash so it can be deposited into the driver's account — that’s 3.5 percent of the total tip — the rest goes directly to the drivers.”

When the reporter tipped the driver 2,000 won, 65 won was taken out, which is 3.25 percent of the tip, and 1,935 won was given to the driver.

Experts, on the other hand, understand the voices rallying against the new service.

“When a dominant taxi-hailing service such as Kakao Mobility implements such a system and maintains it, it may spread to other platforms, eventually leading it to become institutionalized,” noted Prof. Lee Young-ae at the department of consumer science at Incheon National University.

“When every part of the service performance becomes fiscally fractionalized, the burden falls upon the consumers, both psychologically and financially. When they are inside the taxi alone with the driver, they may deliberate on if they should tip the driver if this system becomes prevalent,” Lee added.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]