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Motorcycle taxis serve two purposes:
Short hauls up and down sois (especially for those who ride buses down main roads)
Long hauls to beat the traffic during times of congestion
Motorcycle taxis always wear a vest which identifies where they are permitted to base their operations, and with a number on their back which is unique to the individual.
The motorcycle taxis are usually found at the beginning (and sometimes the end) of sois which have a lot of people, usually due to apartment buildings or businesses, and their main role is shuttling people up and down that soi. They are usually near a bus stop. The fee is usually standard, e.g., 5 baht in some places, 10 baht in others. No helmet is necessary on these little sois.
The motorcycle taxis for long hauls are the same as those for short hauls. Just go to any motorcycle taxi stand. The fare for long hauls is negotiable. You will pay approximately the same as you would for a taxi, more or less. You will just get there quicker on a motorcycle taxi during rush hour, as they drive down the stripes between cars, off the side of the road, down back alleys, literally under buildings, and wherever a motorcycle with two people can squeeze. (Underneath buildings means thru build underground parking lots.)
Be careful to keep your knees in and watch your feet in order to avoid injury. When the road opens up, they may go very fast, including between cars. If you have the misfortune to get a daredevil motorcycle driver, or come across an overly aggressive taxi, it can be a harrowing experience.
It's recommended that you be careful who you choose to be your motorcycle taxi driver. At the motorcycle stands, the leader will often choose a driver. You can have some influence in this. You can also tell them to drive slowly, "by CHA-CHA".
Second to safety, the other main disadvantage of taking motorcycle taxis is you're not shielded from pollution, and if you get behind a smoky bus or car then you could be holding your breath.
If you need to flag down a motorcycle taxi within the middle of a soi or on a main road, you do so the same way as for taxis and buses, turning your palm down and waving them in with your fingers. However, if you are close to a motorcycle taxi group, then no motorcycle taxi outside that group will pick you up.
On long hauls, you must always wear a helmet. Otherwise, the police may stop you and fine you. Who pays the fine? You, the one not wearing the helmet. If the motorcycle driver does not give you a helmet, then ask for one. Short hauls up and down the soi normally have no helmet enforcement. (Besides the legality of it, you should know that many motorcycle accidents which result in fatalities or critical injuries could have been just scratches & bruises or minor injuries if the rider had been wearing a helmet firmly strapped to their chin. The law is countering natural selection.)
For your curiosity, the motorcycle taxis are authorized to operate by the police jurisdiction of the local neighborhood. In the past, they were required to give money to this police office, though this has been changing and the police are officially no longer allowed to collect.
The motorcycle taxi guys are usually very nice and upstanding community members, especially outside of the city center. However, there are some groups which aren't so pleasant and whose eyes look a bit drugged, particularly in some parts of Bangkok.
Some in town are simply daredevils or just dimwits with a short life expectancy, and there have been times in which I've pretended to change my mind and requested to be immediately dropped off rather than continue to the destination. After they're out of sight, I'll find another group.
The advantage of motorcycle taxis is obvious at red lights. However, many motorcycle taxis also drive in-between cars on the open road.
If you are in a taxi or car, always look behind you for motorcycle taxis before opening the door. Countless times I've seen motorcycles crash, sometimes with a passenger or cargo on back, and car doors with major damage. Occasionally, there has been serious injury, too.