Lyft is ensuring that its drivers, who have complained about pay transparency, will earn at least 70% of rider fares each week and will know exactly the breakdown of where the rider's fare goes.
As part of its 2024 release, the ride-share company announced on Tuesday that its new standard ensures drivers will earn a minimum of 70% of rider fares each week after external fees, such as local taxes and government-mandated insurance, get taken out.
In 2023, drivers earned on average 88% of rider fares each week. But about 15 out of every 100 drivers still earned less than 70% of what riders paid on a given week after external fees, Lyft said.
Nearly two-thirds of drivers experienced this at least once, according to Lyft.
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Moving forward, if drivers ever fall below 70% at the end of the week, Lyft said it will pay the difference.
After assuming the role as CEO in April 2023, David Risher set his sights on restructuring the company to focus on better meeting the needs of riders and drivers. The goal was to turn around the company's mounting losses and better compete with rival Uber, which has more share of the U.S. market.
Boosting driver pay has been a part of Risher's mission to do that, as it is making earnings more transparent.
In June 2023, the company made improvements to its upfront pay feature, first introduced in October 2022, which let drivers see what they'll earn before accepting a ride. Lyft said this change facilitated "higher driver earnings that are competitive with the market."
By then, average earnings per ride were already up 10% from earlier in the year and per-ride earnings on long rides were up 14%, according to Lyft.
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Among its slate of updates on Tuesday, the company also redesigned its earnings summary in the Lyft app, so drivers will now be able to see exactly how each rider's payments are split. It breaks down how much goes to the company and the external fees.
Comparatively, in a December Medium post, Uber's public policy team reported that the "vast majority" of rider fares went to driver earnings "and a much smaller portion went to Uber as revenue" in the third quarter of fiscal 2023.
The post didn't quantify how much a "vast majority" is. But gross bookings in the quarter, which is the total amount that riders paid for their rides, rose 21% annually to $35.3 billion.
Lyft's updates, which also include more ways to choose rides at the airport and an easier way to appeal to driver deactivations in the Lyft app, comes amid a trying time for Americans who are battling high interest rates and persisting inflation. Many are having a hard time keeping up with their belts, too, as credit card debt soars.
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The New York Federal Reserve Bank's quarterly report on Household Debt and Credit, slated for release on Tuesday morning, is expected to show that credit card debt hit a new record during the three-month period from October through December, smashing a previous high of $1.08 trillion, according to Matt Schulz, chief credit analyst LendingTree.
FOX Business' Megan Henney contributed to this report.
