Business News

Uber rival Taxify expands into Western Europe pledging cheaper fares and higher pay

Key Points
  • Ride-sharing challenger company Taxify is expanding into Western Europe.
  • The firm launches in London Tuesday, offering 50 percent discounts to users for the month of September.
  • Taxify takes a smaller commission than some rivals, which it says will help improve conditions and pay for drivers.
Taxify founder and chief executive Markus Villig stands in front of Taxify branded car

Ride-sharing challenger company Taxify is expanding into Western Europe in a bid to unseat Uber and bring greater competition to the market.

Taxify will launch in London at 10:00 a.m. local time on Tuesday, September 5, and will offer fares at a 50 percent discount for the rest of the month as it aims to steal a slice of Uber's dominance in the U.K. capital.

The Estonian start-up then plans to maintain prices at a discount to competitors by taking a lower commission: 15 percent compared with the 25-35 percent typically taken by other ride-sharing businesses.

This, in turn, will help the business attract and retain drivers, CEO Markus Villig told CNBC Monday.

"15 percent is enough to be a sustainable, profitable business in all markets," said Villig, who launched the business in Tallinn, Estonia, in 2013, and has since expanded into 19 countries across Central Europe and Africa. Currently the business serves 2.5 million customers.

"Taking a lower cut is much more sustainable than taking a higher one and having unhappy drivers," Villig noted.

Competitor Uber has faced wide-spread criticism for its poor working conditions and mistreatment of staff, which ultimately resulted in the resignation in June of its founder Travis Kalanick as CEO. He was replaced last week by ex-Expedia chief Dara Khosrowshahi.

Like Uber, Taxify's drivers are contractors who own their own vehicles and set their own hours, rather than being direct employees. However, Villig claims that offering drivers an alternative will allow "market forces" to play out and help drive up standards.

"With only one main app there were poor conditions, but London is one of the biggest ride-sharing markets in the world and there is room for more competition," he said.

When contacted by CNBC, Uber said it welcomed competition and supported drivers' freedom of choice.

"Competition is a good thing as it raises service levels across the board," an Uber spokesperson told CNBC via email.

"40,000 licensed drivers also use our app to make money on their own terms and have always been able to work with several operators."

So far, 3,000 drivers in London have signed up to the Taxify platform, up to six-times as many as the number seen in Taxify's other launches to date.

Villig said similar market conditions exist in Paris, which will likely be its next target for expansion.

The launch follows Taxify's partnership with Chinese ride-sharing company Didi Chuxing in August. The pair shares investment and technology, though Didi remains a minority stakeholder.