Uber's service will be called UberPool and Lyft started Lyft Line, which allows users tho share a car when they have a common destination or similar route. The move is seen as an attempt by the two services to take on public transportation systems.
Lyft launched the service for San Francisco users Wednesday with the promise that users will save 10 to 60 percent on a given route. The service will be available on the company's existing iOS app.
"This is great for passengers but it's also good for drivers because drivers earn more on longer trips," said John Zimmer, Lyft's co-founder. "This will not only help create longer trips but less downtime."
Uber announced its service late Tuesday night, saying it would be an alternative for car owners and the service would be in beta testing for Google employees and others who opt in. The service will be launched in San Francisco as well, and, according to the company, would save users as much as 40 percent per ride.
While Uber is trying to compete with Lyft, carpooling is more suited to Lyft's services, which encourages users to sit in the front seat and converse with the driver.
Lyft also disclosed that it has 60,000 drivers in 65 cities, catering to 25 million customers on over 10 million rides. Rover, which was recently acquired by Lyft, has led the team working on the carpool service.