Skip to main content

Taxi Cab Payments

Daniel thinks taxi drivers are missing out on some business by refusing to accept credit and debit cards, even though they are required by law to do so. I think this is an instance in which mandating that all cab drivers accept plastic payments leads to unintended consequences.

(from flickr user sunface13)

I understand why cab drivers don't want to accept credit or debit cards. Cash isn't subject to a "processing fee" - an amount that can be significant, particularly for small fares, like those under $10 or $15. Cash is also better when it comes to tips. People paying with cash often round tips up, especially if they need change. People paying with plastic often calculate an exact percentage tip. Not to mention that cash tips are easy for cabbies to hide from the tax man..

It seems like, if credit and debit fares were truly valuable, some cabbies would willingly exploit that market. They could put big stickers on the side of the car or a sign on top so potential customers know it's an option. If a cabbie typically patrols an area (like universities, as Daniel suggests) where people don't carry cash but like to spend money anyway, it might make good business sense for cabbies to accept plastic payments.

The problem with universal mandates in this case is that the winners are the banks and card processors, and the losers are either the drivers or the customers. In the short-term, non-cash payments will cut into drivers' profits and tips. Over time, cabbies might lobby for higher fares, which would be bad for the customers. Kevin Drum has made some good points on the cash vs. plastic debate. I recommend anyone who wants to learn more to check it out.

Comments

Chris O'Leary said…
The processing fees were the argument against New York cabbies accepting credit card fares - until two years after it was mandated, when cabbies realized that the convenience of accepting cards increased the number of people who used cabs for shorter trips. On top of that, they leave larger tips. In the end, accepting credit cards is better for the cabs, even if they find it annoying.

Popular posts from this blog

In Praise of Southwest's 'C' Boarding Group

A few weeks ago I saw a tweet from someone complaining that their Southwest Airlines boarding pass had been assigned A20 (meaning they would be at least one of the first twenty passengers to board the plane). Apparently this person though they should have been assigned a higher number, less their flight experience be considerably spoiled.

Despite the complaints, Southwest has resisted demands to assign seats on its flights, a decision which I personally applaud. I'll admit that I was skeptical when they rolled out the newest boarding procedure, assigning both boarding groups and a line number; but in hindsight it seems like one of the best operational decisions they've ever made. If nothing else, it effectively eliminated the infamous "cattle call" whereby fliers were getting to airports hours in advance and sitting in line on the floor as if they were waiting for the midnight showing of the new Star Wars movie.

When I was an intern at Southwest Airlines last winter, I…

So You Want to be a Southwest Airlines Intern?

My personal website must have pretty decent SEO - because in the past year, I've received about two dozen emails from aspiring Southwest Airlines interns looking to draw on my experience in search of their own dream internship. In the past two weeks alone a few new emails have already started rolling in...

(from flickr user San Diego Shooter)

If you've found your way here, you might be hoping for the silver bullet; a secret tip that will propel you above the competition. Unfortunately, I do not know any inside secrets. I can only share my experience as an internship candidate about two years ago and, rather than responding individually to future emails I anticipate to receive, I hope that potential interns will find the information posted here valuable.

Understand: Southwest Airlines is a very unique company. The corporate culture at Southwest is truly unlike that of nearly every other company. But you probably already knew that, since it now seems mandatory for every management,…

Commuting Meets Technology

I'm finally out of the dark ages. I got an Android smartphone over the weekend and have since been in the process of exploring the Android apps market.  One thing I've immediately noticed is the really wide range of usefulness in the apps. For example, the WeatherBug app is fantastic. It automatically determines your location and gives you exact conditions for that location. On the other end of the spectrum, Google's Goggles app is supposed to be a type of 'visual search' where you snap of photo of something and Google searches for it. In each of my attempts to use it, the app hasn't returned any search results. I even took a photo of a bottle of Pepsi (figuring it as a common houseful item) and got nothing.

Somewhere in the middle is this app called Waze. Have a look at their 'guided tour':



Some people might look at it and comment on the amazing evolution of technology or on the incredible value of social networks. To me, Waze says something important ab…