Taxi drivers are ignoring bookings in favour of passengers who use smartphone apps to offer drivers cash to pick them up instead.
A number of apps that circumvent taxi companies' booking systems and connect drivers directly with passengers also allow passengers to offer extra money to pick them up, in addition to the standard fare.
One app, goCatch, shows passengers the current demand for taxis in their area and recommends offering a “tip” - which can be between $2 and $100 - to secure a ride during busy times.
Tips are paid to the driver directly through the app and goCatch charges the driver up to five per cent of the total fare amount.
Melbourne taxi driver Muhammad Asif said he had been using goCatch for four months, along with about three-quarters of his fellow drivers.
As well as the extra money, Mr Asif said the app meant drivers were less likely to arrive at an address to find their passenger had already hailed another taxi.
“It is the best option for drivers because it gives you the passengers' mobile number and you can call them to confirm,” he said. “You can tell them: this is my taxi number so don't hail another taxi.”
Mr Asif said he mostly used the app to pick up short fares during quiet periods but that some drivers used it during busy times to take passengers offering tips over jobs booked through their company.
Victorian Taxi Association CEO David Samuel said the “tip” system was unfair on those who couldn't afford the extra money and possibly breached the state's taxi regulations.
“Taxi drivers aren't allowed to charge more than what's on the meter, they can't say to a customer: 'Oh, I'll take you for an extra $20',” he said.
“We're not a public transport service but we do believe in some sort of equality because some people can't afford to pay excessive amounts.
“We need to ensure that people who really need taxis, like the elderly, are able to get one.”
Mr Samuel called for third-party booking apps to apply to the Taxi Services Commission to become accredited providers and operate under the same rules as established taxi companies.
goCatch CEO Andrew Campbell said far from making it harder to get a taxi, the app gave both drivers and passengers certainty and better service.
“The reality is the system was broken before we came along; we're making it better,” he said.
Over 20,000 registered taxi drivers used goCatch across Australia, Mr Campbell said.
This week saw new taxi flagfall rates come into effect in Victoria with the cost of starting a meter going up from $3.20 to $4.20 in the day, $5.20 overnight and $6.20 in the peak period between 10pm and 4am on Fridays and Saturdays.
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