Today, I learned something new about cab drivers in NYC. I took a cab today, and when I took out my credit card to pay, he requested that I pay with cash. I obliged him and expressed surprise that he had to pay credit card fees – I thought that cab owners/company would pay the fees. He spent the next 20 mins in explaining his life.
He owns his cab, and is very strategic about where he drives and how he makes money. During peak hours it is easy for him to make money. During non-peak hours, he finds the right places to wait in to get customers. He is friendly with restaurant chefs and when restaurants close late, he waits up for them instead of driving around. He avoids airports because if he gets a customer who goes to Queens, he only makes $15 instead of the usual $45 to Manhattan. Very interesting!
On a weekly basis, the surcharge of $0.50 is $100. Assuming there are over 12,000 cabs in NYC, the government makes $2,000 per cab which is $24MM annually.
Why do cabbies ask us to pay cash and not credit? Why do they curse when you don’t have cash? Because all credit card payments go from their pocket, and they pay 5%, more than double the usual credit card fees. That is atrocious! Cabbies are now compelled by Mayor Bloomberg to have Verifone screens and credit card machines in their cabs which cost around $300. 5% is charged for Verifone, and this amount is directly taken out from the amount earned by cabbies. On average, this amounts to $200-$300 per month, for a total of $29MM+ annually which goes to Verifone, a portion of which probably goes for credit card fees. The cabbie could have just used that $2,400 per year as savings. Instead it goes to the Verifone company that anyway makes money from ads. BTW the cabbie makes $1,100 per year from the ad over the cab.
I expressed my exasperation to AM about the “atrocities” being committed by Mayor Bloomberg on cabbies, and my desire to stop using credit cards if it pinched them so much. He made a good point – think of how many additional customers the cabbie gets because people can pay with a credit card. Also, what % of cabbies own their cabs? Few? Many? Then all of them don’t really pay that 5%, do they? That got me thinking – do consumers end up spending more because now they can use credit cards in cabs? Is this protection to consumers because cabbies cannot say that they don’t have change?
I wonder… but the cabbie I spoke to was very smart, and I doubt that he would have overlooked the incremental revenue resulting from accepting credit card payments. Or maybe he was among the few cab owners who would prefer to do without the credit card system and just pocket the $2,400.
I wouldn’t put it past Mayor Bloomberg though to be indifferent to cabbie needs. He has stopped traffic on one full lane in West 50’s and Broadway – show me one cabbie who is happy with that move. I live around there, and it just increases traffic. The Mayor wants to go green and has converted that entire lane into a bike lane – I hardly see any bikes, and just see traffic squeezed onto other streets. The last thing the city needs is fewer lanes.
Expensive car service companies should have the ability to accept credit cards because they have the deep pockets, but they do cash and charge a lot more than cabs. I have temporarily put up on the UES (not the Gossip Girl-UES, much further north and east than that), and it is a nightmare finding a cab. Out of desperation sometimes you have to hail down black cars which are plenty here – they charge a lot more than yellow cabs and are very slow drivers because no meter is running.
New York Fashion and My Rants 