Hot Tip for Cabbies: Credit Cards Boost Tips

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Raphael Biaby said he is earning $100 more a week as a cab driver ever since he fitted his car with a credit card machine, boosting his weekly take to $600.

“It’s good. I get more tips,” the Queens resident, who has been driving a cab for five years, said. Many drivers strongly opposed the requirement that the city’s yellow cabs be equipped with credit card machines, backseat television sets, and GPS tracking devices. Now, with nearly 10,000, or more than 75%, of the cars having been equipped, drivers say the new technology is translating into better tips and fares.

The boon for cabbies is partly due to the passengers who like the ease of paying with credit cards, and partly because of the way the new machines display the tipping options. All of the credit card machines give the option of paying tips of 15%, 20% and 25%; some cabs also offer the option of paying tips of $1, $2, and $3 for fares of $10 or less. The options are set by the companies that install the equipment in consultation with the city’s Taxi and Limousine Commission.

“It forces you to tip,” a Manhattan resident who recently tipped 15% on a $14 fare, Greg Mack, said. “What if you didn’t enjoy the ride? It made me feel obligated.”

The TLC said the decision to display tipping options was generated from passenger focus groups. The installation of the new technology was mandated last year as part of an agreement stemming from a 2004 fare hike. Drivers staged protests in September and October, charging that the devices would be a costly invasion of privacy. A number of drivers discouraged passengers from paying by credit card, a practice that has largely been snuffed out thanks to press reports and a TLC crackdown earlier this year, according to a TLC spokesman, Allan Fromberg.

Now, opposition has faded as cab drivers are regularly netting tips of 20% to 25%, compared with the average 10% to 15% tip with a cash fare, according to Fernando Matteo, the spokesman for the New York State Federation of Taxi Drivers, a union that represents more than 24,000 drivers.

Cabbies are seeing a spike in out-of-town fares, as riders are more willing to take yellow taxis for long trips because they don’t have to pay in cash, and business travelers are attracted by the ease of a credit card payment that allows them to keep track of their expenses.

“We’re starting to gain back that corporate clientele,” Mr. Matteo said.

Cab Management Corp., a taxi company based in Queens, is finding it easier to fill shifts, with its pool of drivers increasing by about 10% since it equipped its 60 cars late last year, according to the manager, Sal Rubino.

“More people are taking cabs now because of the credit cards,” Joseph Pross, the owner of a Brooklyn garage, Utica Taxi Center, said. “Most of the drivers like it. They make more tips.”

Still, not every cabbie is a fan of the new devices. Jatinder Singh, a Queens resident who has been driving with the new technology for two weeks, said it is a nuisance. He has less cash at the end of the day, as a large chunk of his fares have been paid on credit or debit cards. It is also bothersome to wait up to three minutes while transactions are approved, he said.

“I don’t have any more money in my pocket. I don’t like the way the system is,” Mr. Singh said, adding: “I’m going to do something else. I don’t want to be stuck with this.” Despite some grumbling, however, the TLC is moving to install the devices in all cars by August 31.

“We had always predicted that drivers would see larger tips on credit card rides,” the TLC’s commissioner. Matthew Daus, said. “This has been one of the main reasons why drivers are now embracing the new technology after having been so tentative about it.”


The New York Sun

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