[THE INVESTOR] Internet giant Kakao plans to lower the service fees for its brand new chauffer service app called Kakao Driver next month amid user complaints about the expensive pricing.

In a statement on June 27, the company said it will lower the current 15,000 won (US$13) basic fee to 12,000 won in major cities and to 10,000 won in other provincial areas. The service fee in the metropolitan area will remain the same. 


The fee cuts come as Kakao struggles to increase profits in its fast-expanding online-to-offline business. The company has launched new services such as the taxi-hailing app Kakao Taxi, the chauffer service Kakao Driver and the hair shop booking app Kakao Hair Shop, in recent months.

With most of the services being offered free of charge, users are complaining about Kakao Driver’s charges and service quality overall.

“We have adjusted our pricing plan based on big data analysis during a monthlong trial period,” the company said in a statement.

Korea’s chauffer service is an almost 3 trillion won market. According to government data, about 470,000 people use the service per day. The basic service fee ranges from 7,000 won to 20,000 won.

Kakao’s entry into the market has also sparked resistance from existing service providers, most of whom are small firms.

By Lee Ji-yoon (jylee@heraldcorp.com)