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Uber drivers can now accept tips electronically, without Uber's help

Before now, all tips for Uber drivers had to be done in cash. But in-car advertising company Vugo is hoping to change that by adding a gratuity feature to its app.

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In-car advertising company Vugo launches a new feature that lets passengers electronically tip their Uber drivers. Vugo

One of Uber drivers' biggest beefs with the ride-hailing company is that they can't get tips from customers through its app. Vugo, an in-car advertising company, may have a fix.

Vugo launched a new feature on Friday that lets Uber passengers leave drivers a tip with the tap of a button. More than 3,000 Uber drivers use Vugo by displaying its app on a tablet mounted in the backseat of their car. And now -- besides ads, news and weather -- passengers will also see a "tip your driver" button on the lower left corner of the Vugo app.

"Creating a way for Uber drivers to accept tips electronically seemed like a natural expansion," Vugo co-founder James Bellefeuille told CNET News.

For Uber drivers, this Vugo feature could be a welcome change. Passengers on the service frequently believe that tips are included in the fare, but they're not. Uber's service, which connects passengers with drivers via a smartphone app, is completely cashless. The company touts itself as being hassle-free and hyper-convenient and says one of the hallmarks of such convenience is letting customers have tip-free rides.

That meant that up until now, if a passenger wanted to tip an Uber driver, they had to do it with cash.

Uber drivers have been urging the ride-hailing company to add a gratuity feature to its app for years. In February, nearly 15,000 Uber drivers signed a petition to get the company to update its app with a tipping option. They said a few extra dollars not only helped with wages, but also showed they were appreciated for a job well done. Uber's top competitor, Lyft, has always lets passengers add tips to their rides.

But, so far, Uber has shown no signs of updating its app with a gratuity feature. The company didn't respond to request for comment for this story.

"Uber is trying to change the culture around tipping service professionals," Bellefeuille said. "The biggest reason why tipping is important is because your driver is delivering a service."

Bellefeuille himself was a part-time Uber driver in Chicago for two years and said he saw how difficult it was for drivers to make ends meet. He launched Vugo in February of this year as a way to them drivers earn extra income. When drivers display the Vugo app in their cars, they get 60 percent of the revenue generated from the ads, Bellefeuille said, which translates to an average of $3 per hour.

A year ago, Uber said drivers could make up to $36 per hour but now it's lowered that number to $22, while saying the average per hour is $19. Many drivers say they make quite a bit less. One of the reasons drivers say they're making less is because Uber has instituted a series of price cuts over the last year, including one in January that slashed fares in 48 cities across the US.

Despite Vugo upping wages for Uber drivers, the ride-hailing service isn't a fan of the advertising app. In May, Uber support staff warned that drivers could be banned if they displayed Vugo's app during rides, according to BuzzFeed. Uber later said that it only "discourages" drivers from using advertising apps like Vugo.

Despite this tension with Uber, Vugo has moved ahead with its tipping feature. The way it works is when passengers click on the "tip your driver" button, they're asked for their email and the amount they'd like to tip. Passengers will then get an invoice that they can pay at their convenience. All payments are processed through PayPal.

"We have the ability to do this and it's not going to hurt our company by facilitating this transaction," Bellefeuille said.