Credit Card Processing on the Rise in Taxicabs

By: Kelly Brown

After overcoming initial challenges, taxicab companies are accepting customer demand for credit card processing.
According to Visa and Mastercard, there are some 980 million bank-issued credit cards and debit card accounts in the United States. Gas stations, movie theaters, and even fast food joints now have point-of-sale credit card processing machines—who carries cash anymore when you can swipe and go? Unfortunately, when it comes to transportation it’s not that easy. While some cities have accepted credit or debit cards in taxicabs for years, it is a concept that has been slow to catch on in major cities like New York, where cash has been the standard. Customers inclined to use a card have simply not been able to. But, there is hope on the horizon as new metro areas embrace the wave of the future, after overcoming the initial perceived challenges. Many taxicab companies have been hesitant to offer this additional method of payment. To speed things along, in 2007, New York’s Taxi and Limousine Commission mandated that by October 2008, all cabs be equipped with credit card processors in the rear of the cab. (These stand-alone wireless point-of-sale systems must allow the passenger to swipe their card themselves.) Similar mandates have been enacted in Dallas and Philadelphia. These efforts were initially met with resistance, in fact, there were major strikes organized by cab companies in protest. Cabbies were upset about the possibility of having to pay any fees associated with processing credit cards. Additionally, since taxi companies are traditionally cash-based businesses, there was some reluctance about an official transaction record. Also, many cab company’s administration staff thought it was easier to deal with cash than hundreds of receipts. However, it didn’t take long for taxicab companies to realize the increased business compensates for any potential fees. Also, the accounting is essentially the same once a company adjusts. But the fact is, customers prefer plastic, which is the greatest benefit. Particularly in larger destination cities, where business travel is more prevalent, it’s easier to just “charge it” and expense it later. There have been some unexpected benefits of the shift as well. Given that taxicab drivers no longer carry cash, the potential for robbery is greatly reduced. Additionally, people tend to leave a larger tip when paying by credit card. For example, in Las Vegas, Sandy Shaver, General Manager for Desert Cab, has seen tips increase from just five or six percent up to 25% when customers aren’t paying out of pocket. It may simply be the customer’s mindset, or the fact that many of the credit card processing machines have advanced features like a “suggested tip” prompt. In the November issue of Digital Transactions, it was reported that of the 6,600 cabs accepting credit cards in NYC, 27% of transactions are paid by plastic. This is more than double the number of just six month before. The trend is similar for other major cities, and whether by mandate or simply to meet demand, the amount of taxicabs accepting credit or debit cards is increasing exponentially. When it comes to transportation, taxicabs aren’t the only ones trying to meet the customers’ growing expectation. For example, the subway and bus system in New York is currently experimenting with ways to accept credit cards. Most airlines now carry credit card processing machines on board. With other forms of transportation jumping on the plastic bandwagon, taxicab companies, while slow to catch on, are quickly catching up.

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Helen Walker. Veritrans offers affordable and reliable credit card processing equipment and merchant account services for taxicabs and other mobile merchants.

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