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Cashiers working for the San Francisco Yellow Cab Cooperative used to make daily trips to a bank and withdraw at least $30,000 in cash to pay that day's drivers. They no longer have to do so.
First National Merchant Solutions, an Omaha, Neb.-based payment processor, has helped Yellow Cab develop a prepaid debit card program to pay its drivers. The program also has streamlined Yellow Cab's operations.
Yellow Cab Controller Pam Martinez had wanted a better way to pay drivers, who are considered independent contractors, for almost a year.
She eventually turned to First National, which already was processing Yellow Cab's credit card transactions. with the Visa-branded smartOne prepaid card. First National Bank of Omaha, First National Merchant Solutions' parent, issues the card.
The companies started discussing and building the new payroll-payment system in June, and in December Yellow Cab offered the prepaid debit card to 200 drivers who lease cabs for at least a month to gauge their interest, says Hal Mellegard, Yellow Cab general manager.
Yellow Cab's decision challenged First National.
"This was the first time we worked with a company that uses independent contractors," Scott McCormack, First National vice president, tells ATM&Debit News. "It was the first time we had to do an instant-load solution for hourly work on a day-by-day basis."
Before launching the debit card program, McCormack and other First National executives visited Yellow Cab's headquarters in San Francisco to get a better idea of how the existing payment system worked.
If a driver turned in $300 worth of noncash transactions at the end of shift, the company paid the driver a percentage of those transactions in cash or by check after some fees were deducted to accommodate daily cab-rental fees and for the amount of gasoline they used if they did not fill up their tanks at the end of their shifts.
Noncash transactions include credit and debit card transactions and vouchers companies use for their employees as advance payment for cab rides.
"It got a point where we had to have a lot of cash around to start the day," Mellegard says. Writing checks also became time-consuming for cashiers.
"[The card] gives the driver a much more secure way of receiving pay," McCormack says, noting it also provides drivers with the same account-access tool that checking-account customers have.
Drivers can make surcharge-free cash withdrawals from any Allpoint ATM. Bethesda, Md.-based Allpoint operates 35,000 surcharge-free ATMs nationwide, and the company has 3,874 locations in California.
Participating drivers also can keep track of card value and use by logging on to a Web site. Drivers can view all transactions and print statements.
Mellegard expects more drivers to switch to prepaid debit cards in the next couple of months. "Most of the drivers who didn't accept [the cards] are foreign-born, and they don't trust banks yet and they're not familiar with ATMs," he says.
First National plans to promote the service to other taxi associations nationwide, McCormack says.
"The movement of payments from check and cash to plastic for efficiency purposes has really extended itself, and we're now starting to see the taxicab industry make adjustments because plastic is so mainstream," he says.
First National also is exploring other industries that may benefit from Yellow Cab's new payroll system, McCormack says. "It might be a situation where you have independent contractors with hourly wages involved," he says. ATM
