Awhile back, I mentioned the fact that cab drivers in New York City were soon going to start accepting credit card payments for cab fares. When I first mentioned this, I talked about how great I thought it was that people would no longer have to carry cash around with them in order to pay fares. Seemed like a great idea because it would be safer to simply carry a card and riders could even earn rewards along the way. One thing that I didn’t consider, however, was the impact that this payment method might have on cab drivers and the amount of money they’re making. A recent article that I read enlightened me about this issue.
In 2004, the taxi commission in New York City negotiated an agreement that would allow for an increase in taxi fares in exchange for the operators installing the new technology in their cabs. With this technology, the back seats of all of the cabs contain a television screen that entertains passengers as they ride. It also contains a global positioning satellite and serves as a credit card payment kiosk as well. The taxi commission maintained that cabbies would likely receive bigger tips since people tend to spend more when they pay with credit cards.
The cab drivers, however, say they’re losing money when they accept credit card payments. First of all, they think that tips have actually gone down because passengers are able to pay tips anonymously without the driver knowing the amount. In addition, cab drivers have to pay up to 5% each time the machine is used, paying $.50 for every $10 they take in, significantly cutting into their profits at the end of the day. Cab drivers also have to pay an additional $3,000 to buy the new vehicles that come with the devices pre-installed.
One driver interviewed in the article said that he used to bring in $700 or more each week. After the economy slowed as a result of the September 11 attacks and cab fares were increased in 2004, forcing more people to use public transportation, the same driver said that he’s struggling to bring home half of that amount now. The added pinch brought on by the credit card devices has been unbearable for the driver, prompting him to go out on strike.
Admittedly, I feel pretty bad for these guys. I’m a supporter of advancements in technology, making payment easier and more convenient, but it seems like something should be done in order to ease their suffering a bit.
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