On-demand transportation Uber unveiled another new feature this morning that will make its rides even more affordable: With its latest software update, users will have the ability to split fares with other passengers. That could not only lower the cost of riding with friends, but it could also increase its potential user base over time.
After requesting a ride, customers with the updated app will be able to access the “fare split” feature. They can then invite other friends from their contact list or enter the person’s mobile phone number manually. The app will then send a text to the other passenger, with a link that will either open the app (if they have it installed) or prompt them to download it and enter their payment information.
For Uber, the new fare-splitting feature will make its rides more affordable in a marketplace that is becoming increasingly commoditized based on price. For its few years, Uber competed mainly against taxi street hails and car service dispatchers, offering rides that were fast and guaranteed to show up. But it charged a premium for that convenience and reliability.
Now, Uber is seeing increasing competition from low-cost options from ride-sharing startups like Lyft and SideCar. In response, Uber previously had lowered prices for its uberX service in San Francisco dramatically. Now fare-splitting will make riding with Uber even more affordable for multi-passenger rides.
A side benefit is that it could get the app installed on the smartphones of passengers who have yet to pay for their first Uber ride. And that could mean more potential passengers down the line.
Since being founded in 2009, Uber has raised a total of $57 million from investors that include Menlo Ventures, Benchmark Capital, Goldman Sachs, Jeff Bezos, CrunchFund, First Round Capital, Lowercase Capital, Founder Collective, and a whole bunch of angels.
Disclosure: CrunchFund, Arrington, TechCrunch. You know the drill.