These days everyone expects to be able to pay with a card for goods and services. So why shouldn’t your customer in the back of your vehicle use a VISA or MasterCard card to pay for their journey? Ken Hansen, Director of BritPay Card Payment specialists talks us through card payments in the taxi industry.
Why accept cards?
- Accepting cards is essentially automating payment. Cash payments sometimes go “missing”. It is very difficult to lose a card payment.
- It is possible to accept an immediate fare payment or deposit over the phone at the time of booking. Taking pre-paid fares greatly reduces the risk of “no-shows”.
- A larger client can simplify their expenses if their employees use corporate cards for journeys.
- Operators minimise cash held by drivers and in the office.
- Company image. Accepting cards is a way of telling the competition, the authorities and the public that your organisation is competitive and up to date.
- Cheques. From July 2011 most banks are removing cheques guarantees, spelling the beginning of the end for cheques in the UK.
If you’re an owner-operator or a small firm, your card turnover may be too low for you to open a merchant account, or you might be unsure about committing to a long contract to begin. This is where a Transaction Aggregator (also known as a Master Merchant) can help. An aggregator runs a merchant account on behalf of multiple clients, and also takes on most of the risk and administration associated with card payments.
Equipment for Taking Card Payments in Taxis
You’ll need a card terminal or computer software in your office for taking payments over the phone, and mobile terminals in your vehicles. Card payment integration is available on newer generation dispatch and telephone booking systems, and via online booking systems.
AutoCab International has introduced full Chip and PIN facilities into by adding an industry compliant PIN Pad to their Minos/Zeus range of data terminals. The data terminal calculates the fare and passes it to the PIN Pad. Alternatively you can lease stand-alone mobile terminals from your merchant provider. Don’t forget to buy spare batteries and in-car charging kits too to make sure your drivers are never stranded, and a manual credit card imprinter kit for emergency back-up.
Unlike the retail sector, in the taxi industry (and to a lesser degree for private hire) there has been a history of charging the customer a surcharge for accepting payment by credit cards. This surcharge is sometimes called a processing or transaction charge and usually ranges between 5 to 12.5% of the fare. Surcharges are often frowned on, particularly by private customers, but they are still legal, although legislation is changing in the face of consumer protests, you should make sure you stay up to date with the rules.
The justification for the taxi driver surcharging is to cover the cost of providing the credit payment facility in the cab. The most common surcharge is 10%. Many drivers who accept cards pay this entire surcharge over to their payment services provider. These providers often supply terminals and payment processing in return for the income of the surcharge.
The development of mobile apps for booking and managing taxis will drastically eat into roadside hailing and telephone trade. Once card transactions have taken over from cash in the industry, in line with retailing, the higher cost of the online transactions will be replaced by cheaper face-to-face transactions for all drivers to remain competitive.
BritPay offers a merchant services for face-to-face, telephone and online card payments, and provides a full range of Chip-and-pin, contactless and web-based terminals.