SINGAPORE - Passengers who cancel bookings of Grab rides more than 10 times a week will now face a $2 fee, the company announced on Tuesday (Jan 10).

"Cancellations made by drivers or passengers cause huge inconveniences to one another - loss of earnings for drivers already en-route to pick up a passenger and loss of trust for passengers waiting for their ride to arrive," Grab said in a blog post.

It hopes to match drivers more and passengers more efficiently by lowering the cancellation rates.

Acknowledging that sometimes there are good reasons for people to cancel their rides, the company said it would be imposing a $2 fee on passengers, only after more than 10 cancellations in a week.

"Once the threshold is reached, $2 will be charged to the passenger's GrabPay account. Non-GrabPay passengers will have to enable GrabPay before making further bookings," the company explained in the blog post.

"Over time, we will review and adjust our cancellation threshold accordingly. Our aim is to encourage people to make a booking and stick with it. Be assured that our app will always give ample notice in the form of warning notifications before we deduct the fee."

Drivers' performance are currently based on, among other factors, their cancellation rates. Low cancellation rates are rewarded with higher incentives and perks, making drivers more cautious about cancelling trips.

"We hope this initiative creates a fairer platform for drivers and passengers, and that all of us will think twice before cancelling a booking," Grab said.

Previously, passengers could cancel their bookings through the app without having to pay any fees. They were however, encouraged to notify the drivers via SMS or phone call as soon as possible, to avoid any inconvenience for them.