Cabbies say debit fee is costing them tips

Local taxi drivers say a dollar surcharge on debit is cutting into their tips. However, the cab companies say they’re looking out for the safety of their drivers.

By Mackenzie Scrimshaw

Local taxi drivers say a dollar surcharge tacked onto debit sales is cutting into their tips, but cab companies say it enhances safety and is needed to pay for all of the costs associated with providing the service.

The extra dollar is added to fares automatically when customers choose to pay with their bank cards.

“People can’t afford to pay a dollar plus give me money,” says John Oldham, a Casino Taxi driver. “That is the tip.”

Oldham, who has been driving taxis for 35 years, suggests that surcharge be cut in half to 50 cents – a rate he says is closer to what retail stores charge.

Brian Herman, operations manager of Casino Taxi, says the dollar “definitely has an impact” on a customer’s decision to tip their driver. He argues, however, that a driver’s quality of service has a greater effect on his or her gratuities.

Majid Latif, general manager of Yellow Cab, says while the surcharge can cause drivers to lose their tips, debit transactions are the safest method of payment as they reduce the amount of cash drivers have on hand. That makes them less vulnerable to theft or robbery.

Where Does the Dollar Go?

Still, some drivers aren’t buying it, and wonder what happens to the money.

Herman says it’s no big mystery. Drivers “have a tendency to think we’re getting rich off the dollar surcharge,” he said, adding that the money actually goes to pay costs involved in debit transactions. These include – in addition to the costs of paper and maintenance – charges by financial institutions, and terminal rental fees.

“It’s not that, ‘OK, somebody’s going to give that dollar to me,” Latif says.

The managers, whose companies rent their terminals from Moneris Solutions, declined to reveal exact figures. But, Herman says Casino Taxi pays more than $200,000 per year in terminal rental fees. He says the company has divided that cost into a surcharge for the customer – the $1 fee on all debit transactions – and a weekly $12 rental fee for the drivers that is built into the $138 weekly stand fee Casino Taxi charges its drivers to use its infrastructure and dispatching equipment.

Yellow Cab, says Latif, charges its drivers $7 per week – about $28 per month – to cover their share of the cost of renting terminals – a fee that has remained constant since Yellow Cab installed the machines in 2009. Latif says the one dollar surcharge on debit transactions accounts for the difference between the total rental fee per unit of $60 and each driver’s contribution. If the figures don’t match, then Yellow Cab accepts the difference as a business expense.

From Paper To Plastic

Though their opinions on the surcharge vary, the drivers and their managers agree on one thing: There’s a growing preference among customers for plastic over paper. Oldham says most of his customers no longer carry cash. This, says Herman, represents a shift towards a cash-less society – a trend Latif has also noticed.

Herman says Casino Taxi brings in up to $6 million per year in debit and credit card transactions alone. That figure accounts for 15 to 18 per cent of the company’s total annual business. In January 2013, says Herman, Casino Taxi made about $28,000 in debit and credit card transactions – roughly 19 per cent of the overall $149,000 for that month.

Meanwhile, says Latif, Yellow Cab earned about $15,000 in debit and credit transactions, representing about 17 per cent of the company’s total earnings in that same month. “That’s a huge chunk,” he says, adding that drivers whose cars don’t have the terminals face a disadvantage.  Latif says about 180 of the company’s 219 cars are equipped with the machines. Casino Taxi, in contrast, has a terminal surplus; the company floats 350 terminals through its 345 vehicles.