[2025 Latest Trends] How Will Regulation of Ride-Hailing Apps Change? A Lawyer Explains Key Forthcoming Issues, with a Focus on Fee Regulation

Ride-Hailing = a “Travel Agency Business” - Dispatch Fees May Currently Be Freely Set

Ride-hailing apps Classified as “Travel Agency Business” under the Travel Agency Act

A ride-hailing app matches passengers (the demand side) with taxis^[3] (the supply side) using digital technology. A simplified illustration of the service and money flows appears below.

Two statutes are relevant: the “Road Transport Act” and the “Travel Agency Act”.

• Taxi services provided by taxi operators to passengers constitute “general passenger automobile transportation business” under Article 3, paragraph 1, item (i)(ha) of the Road Transport Act. Fares and charges (including pick-up fees) paid by passengers therefore require MLIT approval and are subject to strict regulation.
• Ride-hailing app services provided by the app operator to passengers and to taxi operators constitute “travel agency business” under Article 2, paragraph 1 of the Travel Agency Act - specifically, “arranged tours (tehai ryokou)” (items (iii) and (iv)), i.e. acting as agent, intermediary or broker either (a) for passengers in procuring transport services or (b) for transport service providers in providing such services to passengers^[4]. Accordingly, all major app operators are registered under the Travel Agency Act (Art. 3). Dispatch fees paid by passengers or taxi operators to the app are therefore subject only to the comparatively light regulation of that Act, as detailed next.

Price Control under the Travel Agency Act

Under Article 12, paragraph 2 of the Travel Agency Act and Article 21 of its Enforcement Regulations, the fees a travel agent collects from travelers (other than for package tours) must be set at fixed percentages, fixed amounts, or other methods appropriate to the type and content of the contract and must be clearly disclosed to travelers. There is no requirement for governmental approval, nor any statutory caps or floors on such fees.

Accordingly, provided the fees are clearly disclosed to passengers, dispatch fees may presently be set at the operator’s discretion.

JFTC Report: “Surcharges in Times of High Demand Should Accrue to Taxi Operators”

Because app operators are free to set dispatch fees, they employ a wide variety of fee structures. In addition to ordinary dispatch, operators may charge extra for advance bookings, for specifying vehicle types or driver attributes, or for priority dispatch during periods of congestion.

<Example Table of Fee Variations>

Concerning this point, while the JFTC Report organizes the perspectives under the Antimonopoly Act and competition policy on the ride-hailing-app business^[5], it points out, as set out below, that among dispatch fees, surcharges collected in times of demand tightening such as priority dispatch fees ought to be paid to taxi operators.

(Transaction between ride-hailing-app operators and passengers)

(4) Priority-dispatch service

Some ride-hailing-app operators offer passengers a priority-dispatch service. As stated in III-5 above, certain taxi operators have expressed the view that—even if they dispatch taxis in response to passengers’ use of such priority-dispatch services during congested periods—the burden on drivers is heavy, while they receive no corresponding benefit.

One reason passengers pay an additional fee to use the priority-dispatch service is thought to be that, in periods when the supply of taxis is small, passenger-side mobility demand cannot be met. In this regard, even if passengers pay the surcharge to the ride-hailing-app operator, it does not lead to an increase in taxi supply; by contrast, were the surcharge to become income for taxi operators, it is considered that this would lead to an increase in taxi supply and, in turn, to the fulfilment of passengers’ mobility demand.

With respect to taxi fares, MLIT is currently examining a fare-and-charge system that responds to high-demand time periods. From the standpoint of securing the basis of the competitive environment and ensuring passenger convenience, it is desirable that the additional amount passengers pay in times of supply-demand tightening be paid to taxi operators as taxi fares, etc., since this would increase taxi supply by improving taxi operators’ income.

Looking at trends on the supply side, the number of registered taxi drivers has been on a recovery trajectory since April of Reiwa 5 (2023), increasing by more than 10,000 by January of Reiwa 7 (2025). In addition, in order to meet passenger demand under tight taxi supply, the Japan-style rideshare introduced in March of Reiwa 6 (2024) has undergone successive upgrades expanding its scope. Furthermore, most recently, consideration is under way to expand the entities eligible to operate Japan-style rideshare from taxi operators to include bus and railway operators as well. It remains important to secure an environment in which passenger mobility demand can be adequately met under conditions of taxi supply shortage.

(The English translation was prepared by our firm based on the sources cited below.
Source: Japan Fair Trade Commission (April 2025), “Market Study on Ride-Hailing Applications in Japan,” https://www.jftc.go.jp/houdou/pressrelease/2025/apr/250423ridehailing_04.pdf pp 36-37 underlining in the original quotation.)

This is the only point at which the JFTC ventures an affirmative recommendation “from the viewpoint of competition and passenger convenience.” The wording also appears calibrated to accord with MLIT’s transport policy—and with the new fare-and-fee regime likely to be introduced under the Road Transport Act—suggesting the JFTC’s view may influence that forthcoming regime.

Toward New Regulation under the Road Transport Act

Direction of MLIT’s new regulation under the Road Transport Act

According to the News Report, MLIT intends to regulate dispatch fees, possibly by converting them to an approval-based system. The motives cited include passenger confusion between dispatch fees and fares/pick-up charges, and a desire to pre-empt excessive fee hikes.

Discussion of such regulation is underway in:

1. the “Study Group on Diversification of Taxi and Japan-Style Rideshare Fares and Charges” (established Aug 2024)^[6]; and
2. the “Working Group on Autonomous Driving” of the Road Transport Subcommittee of the Transport Policy Council (established Oct 2024)^[7] (“Autonomous Driving WG”).

The Autonomous Driving WG’s suggested direction (extract below) substantially accords with this article’s analysis.

Future Direction (Draft) Regarding Taxi Fares and Charges

Ministry of Land, Infrastructure, Transport and Tourism (MLIT)

• At present, fees charged by ride-hailing apps are governed by the Travel Agency Act and are outside the fare-and-charge regulations of the Road Transportation Act.
• Given the role of taxis as public transportation, should we consider bringing under the Road Transportation Act’s fare regulations those app fees that users find hard to distinguish from statutory taxi fares/charges (e.g., pickup fees)?
• Conversely, where users lack sufficient information about the varying services that taxi operators offer such as special vehicles or top-rated drivers, it may be appropriate to regard as “travel products,” and thus outside the scope of Road Transportation Act regulation, situations in which an app operator with broad knowledge of those services matches them to user needs in a one-stop manner.

--> Future Direction (Draft)

In view of the fact that ride-hailing apps will be indispensable for autonomous taxis and that app-based dispatches are expected to increase, especially in urban areas, it is necessary to clarify the relationship between the taxi fare/charge regime including autonomous vehicles and ride-hailing-app fees, and to address the issue institutionally.

(The English translation was prepared by our firm based on the sources cited below.
Source: Transport Policy Council, Land Transport Subcommittee, Automobile Committee, 4th Autonomous-Driving Working Group, Ministry of Land, Infrastructure, Transport and Tourism, Logistics and Automobile Bureau, Passenger Division (17 March 2025), “[Material 4] Proposal on Regulatory Framework for Platforms Involved in Taxi Dispatch,”https://www.mlit.go.jp/policy/shingikai/content/001882994.pdf excerpt from p. 5)

Key Points to Watch

Based on the foregoing, the points to note concerning regulation of the ride-hailing-app business may be summarized as the following five items:

Consult Experts on Automotive/Mobility Regulation

As productivity gains from ride-hailing and the commercialization of autonomous taxis progress, platform operators will wield ever-greater influence. The JFTC Report and MLIT’s moves aim to secure adequate supply to meet mobility demand and to build a regime adaptable to the autonomous era. Continued developments bear close watching.

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This article is an English translation of the original Japanese article. Please click here for the Japanese original.

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Notes

[1]Yomiuri Shimbun Online, “MLIT to Regulate Ride-Hailing App Fees, Considering Approval System to Curb Taxi Fare Hikes” (last accessed 13 May 2025).

[2]Japan Fair Trade Commission, “Market Study on Ride-Hailing Applications in Japan” (23 Apr 2025) (last accessed 13 May 2025).

[3] In addition to taxis, some apps match vehicles engaged in Japan-style ridesharing (private-car use) or public ridesharing (paid transport by private cars). For simplicity, this article assumes apps that dispatch taxis.

[4] Some app operators also offer package tours as principal under the Travel Agency Act.

[5] The JFTC Report also discusses, inter alia, the antitrust risks of discriminatory treatment in matching criteria or unilateral changes to such criteria; those points are beyond the scope of this article.

[6]https://www.mlit.go.jp/jidosha/jidosha_tk3_000123.html

[7]https://www.mlit.go.jp/policy/shingikai/s201_jidouunntenn01.html

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The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.