A proposal by Chicagos mayor that all taxi drivers be required to accept credit and debit cards has not thrilled the citys cabbies who may have to pay the interchange fees, and who prefer cash but has gladdened card industry executives who are working to make plastic more pervasive.
Mayor Richard M. Daley announced in a Jan. 31 press conference that the citys Department of Consumer Services, which regulates taxicabs, was considering a regulation that would require all of them to have wireless payment terminals for card acceptance. He was responding to a spate of taxi driver robberies, and arguing that hacks would be safer if they carried less cash.
The proposal was open to public comment until Feb. 8, and Consumer Services will decide whether to make the regulation final. If it does and the agency usually accedes to the mayors wishes wireless devices would have to be installed immediately in cars with licenses issued after the regulations effective date, and all others would have to have them by March 1, 2002. Customers would then be able to pay in any of Chicagos 6,700 cabs with a credit or debit card, or perhaps even with the citys transit stored-value chip card, called the Smart Card.
The public is more and more interested in credit cards everywhere, Mr. Khachadourian said. Consumers feel better about using credit cards in cabs because they can swipe the card themselves and get instant authorization. The public did not feel comfortable giving the card to the driver, Mr. Khachadourian said.
Now that wireless terminals are making cab credit card payments possible, the industry must get the drivers themselves more comfortable with noncash payments, said Alfred Lagasse, executive vice president of the Taxicab Limousine and Paratransit Association, a trade group headquartered in Kensington, Md. Mr. Lagasse predicts that customers will come to seek out cabs that take plastic, giving drivers an incentive to switch.
The driver would like to collect cash and have the full face value, he said. But if being able to take a credit card gives me two more calls a day, then it is worth it to me, because I make more money.
One of the largest taxicab companies in Chicago is eager to make its vehicles plastic-friendly. Yellow Cab Management runs 2,300 cabs, or about one out of every three in Chicago.
Jan Johns, corporate vice president of Yellow Cab, says she has been a proponent of credit cards in cabs for years. The public likes them, she said. But we couldnt have done it two years ago.
Back then, when a customer wanted to pay with a credit card, the driver had to call out the card numbers over the air to the dispatcher, who would get approval for the charge and relay the authorization number back over the airwaves.
Even then, the transaction was not a sure thing. Because of the lag time between when he took it and when the receipt was submitted, the card could be over limit, Ms. Johns said.
Yellow Cab has run a credit card pilot before and is proposing a pilot program to Chicagos regulators that would have drivers swipe cards through card readers attached to their meters. The meters, equipped with wireless modems, process the payment immediately, allowing the cab company to pass along the payment to the driver immediately. The driver still has to pay the interchange fee, though Ms. Johns said it would be lower than with the old system.
We did surveys with the drivers with favorable response, she said. It will increase their business.
Like many jobs that involve large amounts of cash, cab driving is dangerous. The Department of Justices National Crime Victimization Survey found that taxi drivers suffer the third-highest rate of on-the-job violent crime, following only police officers and security guards.
Some experts say that the job will become safe only when drivers no longer carry so much cash. Merchant acquirers would be happy to offer card processing services to cab outfits, but disputes over who pays for terminals and processing fees have impeded cabs credit card acceptance.
Despite some resistance from drivers, industry insiders say that more customers are demanding the ability to pay with plastic, and cab companies are looking to credit cards in attempts to make their drivers safer. New wireless technologies are helping the trend gain steam.
The taxi business used to be micropayments, with fares of $5 or $7. Now you take a cab downtown and it costs $40, said Paul Sabella, president of Nextday Funding.com of Columbia, Md., a merchant acquirer that is running a credit card pilot test with around 100 Washington-area cab drivers.
Mr. Sabella is offering the cabbies wireless terminals that accept credit cards and authenticate them instantly. To encourage takers, he is giving drivers vouchers good for a $250 plastic safety shield and is marketing the cabs to hotel concierges, who can then offer plastic-accepting cabs to their patrons. A similar test is under way in New York.