How Does Ridesharing Work?

Ridesharing allows individuals in need of transportation access a pool of drivers through a mobile app. Rideshare services have become an increasingly popular method of transportation in the last few years. There are a number of rideshare service companies. Among the major ones are Uber, Lyft, and SideCar.

How It Works

Each rideshare company has an app you download on your smart phone to use when you need to request transportation. A passenger uses the app to request the type of service they want and their destination. The app uses the GPS on your phone to find your current location and the nearest available driver. Once a driver is selected the app displays the driver’s name, license plate number, and route. As a passenger you’re able to track your driver’s location, as well as receive a text message once they arrive.

Service Types

Passengers can request different types of rideshare services. For example, Uber provides five service options: UberX, the most inexpensive option; Uber Taxi, which requests a commercial yellow cab; Uber Black, a private car; Uber SUV, a car that seats up to six and Uber Lux, which feature luxury cars.


Fares are set in each city based on a formula using either a per mile rate or per minute rate. Fares can increase during high-demand periods. Passengers don’t need to tip since gratuity is factored into the fare. Before you request a ride you can get a quote by entering the pickup and drop off location. The GPS on your phone tracks the distance of the ride to calculate the cost. Once you arrive at your destination the credit card you registered is automatically charged and you receive an email receipt. If you’d like to share the cost of your ride with another passenger there is an option in the app to split the fare.

Rideshare Drivers

Rideshare drivers use their own vehicles, which must be in good working condition and model year 2000 or newer. To get hired a driver must be at least 23 years old and is required to go through a background check and interview process. Drivers must be licensed and have personal automobile insurance. Each rideshare company also provides excess liability insurance. For example Uber and Lyft provide 1,000,000 in excess liability insurance per occurrence. Although not a requirement rideshare drivers should be friendly, outgoing, and have an interest in meeting new people. Passengers have the option of rating their driver and can see a driver’s rating when requesting a ride.

Becoming a rideshare driver is a great way to make extra cash in your spare time. Drivers do not have a set schedule, instead work when they are available and for as long as they please. Unlike most jobs, when you work as a rideshare driver there is a direct correlation between how hard you work and how much money you can earn. A driver receives 80 percent of the revenue from each ride. Additionally, some rideshare companies offer bonuses and incentives for new drivers.