The Unlikely Savior Of NYC Cabs

Private industry often points to governmental regulations as a source of added expense that makes them less competitive. In this case, NYC's requirement two years ago that taxis accept credit cards has resulted in growth in ridership and revenue.

Paper or plastic? Cabbies dreaded the idea of being forced by a new city regulation to accept plastic, but lo and behold, their customers like it, and its showing....in tips as well as more fares.

"Overall ridership and revenue have increased. More and more fares are being paid with credit cards, even for shorter rides. And tips for drivers, usually an early casualty of tough times, are up sharply, double over the pre-plastic days."

Interestingly, NYC was actually late in coming to requiring plastic. However, unlike other cities, like LA, the city "pioneered a customer-friendly system that required no signed receipts, no minimum payment and an interactive device that let passengers swipe the card and add tips themselves."

Consequently, unlike most other cities (including LA), "revenues have risen about 13 percent from the end of last year, according to data collected by the city's Taxi and Limousine Commission. And tips, which hovered around 10 percent when cab rides were cash only, averaged 22 percent on credit-card transactions this fall."

Thanks to Mark Boshnack

Full Story: New York’s Cabbies Like Credit Cards? Go Figure

Comments

Comments

Slightly Misleading

The planetizen article and lead in are slightly misleading as the taxi cab industry is really mercantilism at its finest (i.e. a government-mandated oligopoly). Sure, the taxi cab companies are private, but a taxi cab driver must have a medallion to drive a taxi cab (or at least lease one from an existing driver). The number of medallions available is detremined by a taxi cab commission, so the amount of cabs on the street is directly controlled by the government via the taxi-cab commission (there's an equivalent body in every town). I'd love to believe that the number of medallions determined by the commission is based on sound scientific analysis of supply and demand, but it's more likely to be determined based on the size of kick-back given to the commissioners. Therefore, the key to making money in the taxi industry in every City is to get one of the limited supply of medallions (i.e. be an insider on the oligopoly). The supply is always kept artificially low (kick-backs do work after-all), so demand will always outstrip supply, and you will make money no matter how poor your customer service... so why go through the hassle and cost of installing a credit card payment system if, on an individual basis, you will still make money anyways? Only a government-protected monopoly/oligopoly would respond like this to customer demand (taxi customers obviously like the service if the tthe article is to be believed)... think airlines, power companies and insurance companies. The flip side is that with the system the way it is, change must be regulated from the top down, so good-on the taxi commission for doing something (and lo and behold, satisfying customers increases revenue... amazing).

I just wanted to point that out as taxi cab profits are mainly derived from the government controlling the supply of cabs, so the first sentence of the article's description really doesn't apply in this case.

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