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.


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,…

Mixing Sports and Business

In the last two days I've devoured every article in the Washington Post about the Nationals painful and epic defeat on Friday night in the NLDS. It was a tough way to see the season end, there's no doubt about that.

(from wallyg on Flickr)
These articles make it clear that there are a lot of people emotionally invested in professional sports. I think they sometimes they forget that, ultimately, Major League Baseball is big business. Each team is a major corporation and the league itself is an organization governed by a bunch of executives. The television networks that show the games are under contract with the team owners and the games aren't usually available to those without cable.

This is why it can be so hard to be a fan in this game. It's the multi-millionaire and billionaire owners that call most of the shots. They get to decide how much they're willing to spend on players. They get to decide who to hire as the CEO of the company. They get to decide how much t…