An app-based taxi service is being launched to take on Uber - led by disgruntled drivers.

Leon Kang, director of UrbanNZ, said the new service would match Uber fares and compete with the international transport app on "credibility and reliability".

"We are making it mandatory for all prospective drivers to have background checks, medical checks and get a proper passenger endorsement under NZ Transport Agency rules," said Kang, who drives for Uber at present. "Quite a number of Uber drivers have expressed interest in joining us, but we will be screening who we take on."

The company was finalising its app, which according to Kang was "very similar" to Uber, and was planning for a launch in August.


"Uber seems to think it is invincible, but we are here to prove that they are not and give them a run for the money," said Kang.

In April, Uber slashed fares by 20 per cent, cut the cost of becoming a driver from up to $2000 to $20 and removed rules requiring drivers to carry a passenger endorsement or service licence.

The Transport Agency said the new rules were unlawful and warned that drivers found to be transporting paying passengers without the proper licence risked a $500 fine.

Uber is disputing that its lower barriers are illegal or compromise passenger safety.

The Herald on Sunday understands many Uber drivers are quitting as they feel that the new fares, starting at $1.35 a km, no longer provide them a sustainable income.

Kang said despite matching what Uber charges, drivers will have "more money in the pocket" because of lower commission fees.

Uber drivers usually kept 80 per cent of the fare, paid via a pre-registered credit card, but UrbanNZ, drivers would get to keep 87.5 per cent.

"The benefit for customers is that they will be getting legal drivers and can have peace of mind," Kang said.

"For drivers, the benefit is that they will have more money in the pocket and a reputation of working for a more credible company."

Uber's controversial entry to the taxi industry has caused upheaval and controversy around the world.

Uber New Zealand and Australia spokesman Caspar Nixon said the company did not comment on other businesses in the industry.

Transport Agency spokesman Andrew Knacksted said the agency had not had formal contact with UrbanNZ.

"We are aware there are several operators internationally that use a similar model to Uber's.

"We anticipate some may be considering launching in New Zealand," he said.