TNC

A Transportation Network Company (TNC) is a company that uses a digital platform or mobile app to connect passengers with independent drivers for on-demand transportation services.

TNC at a glance

Full term: Transportation Network Company
Year defined: 2013 (by the California Public Utilities Commission)
Notable examples: Uber, Lyft
Primary technology: Mobile apps with GPS capabilities
Key feature: Drivers use personal vehicles to provide rides

What does TNC stand for?

TNC stands for Transportation Network Company.

Quick Read:

The abbreviation TNC stands for Transportation Network Companies. This term describes an increasingly popular method of finding personal travel, fast. TNCs provide users with transportation through an online platform that connects them to drivers that are nearby. Examples of such companies include Uber and Lyft.The term TNC was formally defined by the California Public Utilities Commission in 2013, following the development of relevant online technology. TNCs have been steadily increasing in number due to increased demand, based on the ability to book a taxi via an app and the ability to register a debit card to the account.To learn more about Transportation Network Companies, check out our FAQ below:

How do TNCs work?

Each travel network company will differ slightly in the services that they offer, but generally, they will all use software to connect users with a driver. In order for this to work, the TNC will recruit a driver that passes the company's requirements on training, vehicle specifications and background checks. The driver will then download the software (usually a smartphone app) in order to receive pickup requests from the customer.

How do TNCs differ from traditional taxi companies?

Here's how TNCs compare to traditional taxi services:

How are TNCs regulated?

TNC regulations vary by location but typically include licensing requirements, insurance mandates, and background check laws for drivers. In the US, the California Public Utilities Commission was the first to formally regulate TNCs in 2013, and many states have since adopted similar frameworks. Regulations often require TNCs to maintain commercial liability insurance and ensure drivers meet specific safety standards.

What are the pros and cons of TNCs?

PROS:

TNCs often cost less than a traditional taxi service, unless surge pricing is in effect.
TNC apps are widely accessible and easy to use. They are streamlined to make travelling as easy as possible, and they even provide important information such as the driver's registration number, contact information and the driver's ETA.
Customers can pay without needing to present a bank card or cash. Users can simply use a pre-registered card to pay for a journey at the tap of a button.
Service quality is maintained through the ability to rate both drivers and customers after the ride

CONS:

Costs of TNCs may be higher at times due to surge pricing. This is most prevalent at peak times and can be avoided by travelling during less busy periods.
During busy periods, it may be difficult to book a trip at all.
Driver quality and vehicle condition can vary since drivers are independent contractors using personal vehicles.
Regulatory requirements differ by region, which can affect service availability and consistency.
Data privacy considerations exist as apps collect location and payment information.