The move comes as the global corporation's chief executive Travis Kalanick announced an indefinite leave of absence. The entire tip amount will go to the driver, with Uber taking zero fees on the tip portion of the payment.
Driver pressure will have played a significant factor - but it is likely that wider concerns are what prompted this latest move by Uber, a company left in tatters after a hugely critical report into its culture.
It's not hard to see this entire initiative as one big PR move for a company that may be in danger of losing its drivers to a rival company.
Investors had been growing impatient with the 40-year-old Kalanick despite a pledge to implement reforms. Days later the judge bans Uber from using technology taken from Waymo, but doesn't order Uber to halt its self-driving vehicle program, as Waymo requested. "All it takes is you saying 'I'll choose Lyft because I've heard bad things about Uber, '" Ramsey said. Kalanick remains on the board of directors at the company.
Jan Dawson of Jackdaw Research says automotive CEOs would be a good fit, and would be familiar with Uber's push into autonomous vehicle research.
Following Kalanick's announcement, early Uber investor Bill Gurley of Benchmark Capital offered praise for the departing CEO.
The past few months have been a particularly trying period for #uber, the world's most valuable start-up.
"Even though Kalanick was driving performance, the company is not sustainable in this form", said Jennifer Chatman, a business professor at the University of California at Berkeley.
Uber has not only disrupted the local transport industry in dozens of countries.
Among other changes made to satisfy drivers was the implementation of a new policy that allows them to collect a fee if a rider cancels after two minutes.
Later Tuesday night, news broke that CEO Travis Kalanick was resigning. Although the #Company has been commercially successful, it has had to tackle a range of issues starting from sexual harassment at the workplace to angry drivers.
Before Kalanick's departure, Uber had been shaking up its ranks.
Meanwhile, Uber is facing a criminal investigation into its use of a secretive software tool to evade law enforcement and is battling a lawsuit that accuses the ride-hailing company of stealing rival Waymo's self-driving auto technology.
The outside team, led by former U.S. Attorney General Eric Holder, was hired to launch an internal investigation a day after Susan Fowler, a former engineer at Uber, detailed in a blog posting on February 19 allegations of harassment, discrimination, and retaliation during her employment at the company, and ineffectiveness of its policies and procedures. It described Uber's adoption of tipping as "fantastic news for drivers" in an emailed statement.
In a separate statement posted Tuesday, Uber's lesser-known co-founder, Garrett Camp, said the company must hold itself to a "higher standard" in the wake of its numerous scandals.