Why users feel Ola, Uber, Rapido's advance tipping is grossly unfair
Uber and Rapido's "advance tipping" feature, where users are prompted to tip drivers before a ride begins, has come under heavy criticism from the Central Consumer Protection Authority (CCPA) and consumers. Last week, the CCPA issued a notice to Uber, raising concerns about the feature, which encourages users to "add a tip for faster pickup". The advance-tipping feature is unethical and, in a way, promotes bidding for cabs.advertisementUber suggests that drivers may be more likely to accept a ride if a tip is included upfront. Rapido and Ola Cabs have also adopted similar models, nudging users to pay extra to improve their chances of securing a ride quickly.Union Minister for Consumer Affairs, Pralhad Joshi, confirmed that the CCPA was investigating ride-hailing apps, including Ola and Rapido. Uber was already under the CCPA scanner.
"Forcing or nudging users to pay a tip in advance for faster service is unethical and exploitative. Such actions fall under unfair trade practices. A tip is meant to be a token of appreciation, not a precondition for service," Joshi said.HOW DID THE ADVANCE-TIPPING SYSTEM START?Interestingly, this controversial system originated with the Karnataka government-backed app Namma Yatri in 2022.Rapido adopted it in 2023, and Uber rolled it out in April 2025, after announcing the feature late last year.advertisementRapido has defended the feature, saying it's optional and only appears when no driver accepts a ride within 30 seconds.Namma Yatri, interestingly, has tweaked its language from "add a tip" to "add more (voluntary)". It is meant to show that advance-tipping is a customer preference and voluntary.However, in the ecosystem where cabs are meant to be booked in real time, advance tipping doesn't remain voluntary. There is always a fear playing out – if I don't, others will.WHAT ARE DARK PATTERNS ON E-PLATFORMS?Advance tipping could also be a case of dark patterns and drip pricing — two deceptive design strategies increasingly criticised in digital services.A dark pattern is a manipulative interface design that tricks or pressures users into making choices they might not otherwise make, typically benefiting the platform at the user's expense. In this case, by subtly nudging users to believe that adding a tip will improve their chances of getting a ride quickly, the apps exploit behavioural psychology to drive higher payments.The Indian government has asked e-commerce platforms to conduct internal checks for dark patterns on their platforms.Consumer Affairs Minister Pralhad Joshi said, "Companies must not wait for CCPA to intervene. They should proactively recognise and remove these deceptive practices before notices are issued. This is not regulatory compliance: it's about building trust with your consumers," according to a press release by the Ministry of Consumer Affairs.advertisementDrip pricing, on the other hand, involves displaying a low initial price while gradually revealing additional costs, like tips, throughout the transaction process. What seems like a straightforward fare can suddenly inflate, with users feeling cornered into paying more just to ensure basic service.An example of that would be base fares advertised by airlines. While booking air tickets, passengers pay for a host of charges, including seats, which makes the final fare much higher than the one displayed.A study by the Advertising Standards Council of India (ASCI) also found that 52 of the top 53 apps have deceptive UI (user interface)/UX (user experience) practices that mislead users into opting for something they originally did not intend to do.The study revealed that these problematic apps have been downloaded 21 billion times and flagged the impact on consumer behaviour because of such practices.The deceptive patterns discovered include privacy deception, interface interference, drip pricing, and false urgency, an official statement issued by the advertising industry's self-regulatory body said.advertisementWHAT ARE UBER, OLA AND RAPIDO USERS SAYING?Public sentiment has been overwhelmingly negative on advance tipping that most ride-hailing services, including the market-dominating Ola Cabs, Uber and Rapido. Social media platforms are flooded with complaints:"This whole 'advance tip' scam started with Bengaluru autos and was pushed by Namma Yatri. Now it's spread like a virus—Uber and Rapido have picked it up, too. Asking for extra money before the ride in the name of 'better service' is nothing but daylight robbery," wrote one user on X (formerly Twitter)."Some action needs to be taken against Rapido and Uber. They're asking for a tip before the ride is even booked. Booking rides used to be much easier before this feature," wrote another.Another user called the practice a scam: "Uber India and rapidobikeapp have created this unfair system. Drivers won't accept rides unless you add a tip–sometimes even waiting until the tip reaches 60% or 80% of the fare (sic)."One comment pointed to the deeper issue: "If you allow unethical pricing like surge charges, the next step is bound to be advance tipping. Thanks PralhadJoshiOfc for calling out Uber India's exploitative practice. This kind of Loot Economics must stop (sic)."advertisementSome have also raised questions about whether the tip truly benefits the drivers:"This was rapidobikeapp urging me to tip just seconds after booking a ride. The wait wasn't even a minute. Do tips go entirely to the drivers, or does the company take a share apart from its aggregator fee?"Others highlighted broader issues. "Uber's upfront pricing is hurting drivers. It doesn't compensate them for pickup mileage, time, or wear and tear. The system isn't sustainable–and now this new tipping model makes it worse."The situation is ironic because users took to the ride-hailing apps to get rid of haggling but are now being forced to do the same with drivers online. That is why Ola Cabs, Uber and Rapido aren't just under the government's scanner over advance tipping, they are facing public backlash too.
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And with every result, you will have a different reaction. The more important aspect is the medium-term. If you look at the period from 2010 to 2020, the GDP growth rate was normal—around 11 to 12% CAGR (compound annual growth rate). However, India Inc. was suffering. So, India Inc.'s profitability from 2010 to 2020 was very low—in the single digits, around 2 to 3% CAGR. Also Read | ICICI Prudential has growth cover in place If I break that down further, the NSE 500 profits-to-GDP fell from 4.7% in 2010 to almost 2.7% in 2018–19, and then to 2% in 2020, which was a Covid year. But that sharp drop in profits-to-GDP meant GDP grew, but profits did not. If I break that down even more, that fall was sustained by the ₹60,000 crore capital-intensive businesses between 2015 and 2019 across about 19 sectors. The profit growth we saw from corporate India in 2020 to 2024, and likely up to March 2025, has been quite strong. And that, too, was led by the cyclical, capital-intensive businesses and the banks. Whereas the defensive sectors—FMCG (fast-moving consumer goods), IT, pharma—were actually beneficiaries of lower commodity prices. They were doing well all the way up to 2020, and even into 2021. But from 2021 till date, they have been big underperformers. They had become very expensive by the end of 2021. Another segment of the market—more cyclical and value-oriented—started to perform better. So that sort of reversal is happening in the market in the medium term. For us, if you see the last four years—2020 to 2024—profit growth has been around 35% CAGR for India. This year also looks strong. So over five years, it should be in the 30%+ CAGR range, which is much higher than what we saw in the previous decade. What about the medium-term expectation? For the next few years, which is the medium term, I believe it will be more subdued. So while we had a 20–25% earnings growth rate in recent years—which benefited the market, plus added alpha—that was because if you were in cyclical, capital-intensive, corporate banks, PSUs, you did extremely well compared to the market. Also Read | Charlie Munger shaped investing strategies beyond numbers writes S Naren If you were in defence, you were in base capital-intensive sectors—everything was at 50%, 60%, 70% discount to book value. You had tons of value, and India was trading below the book value in many areas. So that part of the story is also, I won't say completely done, but has played out to a large extent. And to that extent, going forward, we should expect the earnings growth rate to again normalize, around the nominal growth rate of 10–11%, maybe a bit lesser. Alpha-rich opportunities will also be fewer and far between. It will be tougher to generate alpha going forward. So I think we are entering a new phase of the market—still positive, but the returns will be far more subdued than what you have seen in the last few years. What kind of returns do you expect from Nifty 50? Over the 15-year period from 2010 to 2025, GDP growth has averaged around 11.3%, with NSE 500 earnings growing at about 11.6%. While stock performance has been notably strong in the last four years, over the full period, NSE 500 returns have broadly tracked earnings, averaging close to 11%. So, I think the market's long-term growth links closely to nominal GDP and profit growth. EPS (earnings per share) growth is key, and I expect it to be around 11 to 12% at most, which will be reflected in the broader market. From here, stock-picking becomes crucial. You'll need to focus on select sectors and avoid others to generate alpha. Does that imply investors should consider increasing their exposure to fixed income and precious metals? Investors should consider increasing exposure to fixed income and precious metals for a balanced portfolio. Over the long term, diversification remains essential—balancing equities, fixed income and alternatives. Even if the market delivers 10–12% compounding returns going forward, that is still better than most other asset classes. So, maintain the right equity exposure based on your goals and risk profile. If you are significantly overweight on equities, it may be a good time to review your portfolio and consider reducing your exposure. How do you balance between large-, mid- and small-cap segments, especially given the recent sharp recovery and the broader market correction of 20–30%? With alpha-generating opportunities becoming limited, where do you see the potential now—are large-caps set to lead, or do mid- and small-caps still offer better prospects? We were significantly overweight on mid- and small-caps starting in 2022, but we reduced our exposure shortly after. Post-FY24, mid- and small-caps saw a sharp correction, which made those segments relatively less risky. It had been an unprecedented rally, with almost everything doing well. Looking at the data from late February to early April—when the market bottomed—that period presented a good opportunity to increase our exposure to small-caps. On the way down, we selectively added to our mid- and small-cap positions, remaining stock-specific in our approach. Mid-caps, as a basket, still look expensive, while small-caps and large-caps appear more reasonably valued. That said, despite high valuations in certain areas, a few select stocks stood out and were added to our portfolio. What are the factors that we need to watch out for? I think the biggest event will be the end of the 90-day tariff pause—that remains the key event. India has signed a UK FTA (free-trade agreement), and we are also looking forward to a potential FTA with the US. Relatively speaking, some developments are already priced in or at least partially expected—for example, the rate cuts anticipated from the Reserve Bank of India (RBI). That's the third major factor: policy direction and potential rate cuts. Another important area is commodity prices. You cannot ignore crude prices, especially given our import dependence and energy needs. With crude and other commodities coming off (peaks), that is clearly a positive. We are closely watching developments in Russia, Israel, Iran and the US—all of which are influencing global prices. And last, but not least, government spending is helping drive recovery, and a large part of the slowdown in the domestic economy could be attributed to the cautious fiscal stance around elections. What about private capex? Private capex has started picking up, but not in a significant way. While cash flows are improving and interest rates are easing, companies remain cautious. We are still far from the scale seen between 2004 and 2010, when private investment surged—that kind of momentum is missing. Multiple uncertainties have contributed: Covid, the Russia-Ukraine conflict, India's elections, China's slowdown and uncertainty around US policy. All of this is making the private sector hesitant to commit large capital. China plays a key role here. Its excess capacity and export redirection to countries like India are putting pressure on domestic margins, creating further investment hesitation. However, in the medium term, this could present an opportunity. As global supply chains diversify, countries like Vietnam, Bangladesh, Mexico—and potentially India—stand to benefit. In sectors like textiles, India isn't uncompetitive, but tariff differentials with countries like Bangladesh and Vietnam are a disadvantage. Trade deals like the UK FTA could help address this and spur investment. So while near-term caution remains, some of these headwinds could turn into tailwinds for private capex if global and policy dynamics shift in our favour. Given the recent concerns and the noticeable flight of capital from the US, I wanted to get your perspective on how India is positioned within the broader global investment landscape. From the foreign portfolio investor (FPI) inflow point of view, do you see capital moving more aggressively toward China, or do you think the shift will be more balanced — perhaps favouring both India and China equally? Despite the US running a large deficit, the dollar has continued to remain strong. If that were to reverse—if the currency were to weaken from here—financial investors holding US assets, especially equities, could start diversifying out. We're already seeing signs of that. European equities have seen some flows, and in India, while flows are mixed, some have turned positive, with increased interest in Indian equities. China is a more complex story—there's direct uncertainty, and it's hard to say how that will play out. But yes, parts of the markets, like Taiwan, have benefited, and the Taiwanese dollar has appreciated significantly. European currencies like the euro and Germany's economy are also seeing some support. Latin American currencies, too, to some extent, are appreciating, making financial assets there more attractive. If this shift continues, it could support countries like India, helping both the government and RBI stimulate the economy more effectively. Of course, all of this is speculative for now—we're watching closely. The biggest investors remain in US equity and bond markets, and how they react, especially in terms of carry trade positions, will be key. Which sectors are you overweight and underweight on? We continue to be overweight on manufacturing and still like metals. We are also positive on allied businesses like some corporate banks, where we remain overweight. When it comes to the consumption space, we believe it is evolving beyond just products. The data shows that while premium consumption is steady, especially among HNIs (high-net-worth Indians), there is also an emerging class moving up the pyramid. Traditional consumption—like FMCG products such as shampoos and packaged goods—seems to be saturating. Today, discretionary spending is shifting more toward services: financial services, healthcare, travel and organized retail. Even the way people purchase goods is becoming more experience- and status-driven. One thing that you think investors are probably underestimating? I think the biggest risk today is in investor expectations. People have gotten used to a market that hasn't seen any major correction—not even a 10% drop—from June 2022 to September 2024. That's made investors complacent, and that's a bigger risk than any real economic concern. From a macro perspective, India is fine. Economic conditions are stable, the currency is holding up, forex reserves are healthy, and current account deficits are at manageable levels. India remains one of the fastest-growing large economies and the largest democracy, so there are no major structural concerns there. The real challenge for equity markets is sentiment and behaviour. Corporates are being cautious, not overspending, and private capex is still conservative. Banks are also lending carefully, especially for capex-heavy projects. In contrast, market participants have priced in a more optimistic global scenario than what may actually play out—and that can lead to disappointments, as we've seen since September 2024. Minor corrections are not just likely, but healthy. Valuations had become stretched, especially for retail-heavy stocks. Flows have slowed, and if you look at cross-sector investment activity, it has moderated—which is the right thing. The rally of the past four to five years was exceptional, but that can't continue at the same pace.
