While the majority of American consumers continue to decry the high costs of credit cards, cabbies in New York are very thankful for them.
When the city of New York made credit card cab fare payments mandatory, cabbies were in an uproar. A few of them went on strike saying that the move was a result of the city kowtowing to tourists and that it was a major burden on cab drivers. Two years later, New York cabbies are now singing a different tune. Now, the back-of-the-cab credit card swipe has become an unexpected savior of the taxi industry in the city.
A number of cities in the U.S. are seeing their taxi fleets struggle for fares as people hold on to their cash in the current recession. In New York, however, revenues and overall ridership have gone up. Credit card fare payments have also become more common and cabbies are seeing credit card payments even for short rides. Cabbies are also seeing another side benefit; driver tips, one of the earliest and easiest casualty of the recession, have actually steeply increased and are now double compared to the days before credit card fare payments became common.
New York cabbies are definitely seeing that credit cards have been good for the taxi industry. Other U.S. cities are also taking notice and are now in a rush to follow New York city's steps. Actually, New York city was late in bringing credit card payments to taxi riders. However, it was able to jump ahead the other cities implementing credit card taxi fare payment schemes by pioneering a more customer friendly system which no longer required signed receipts, demanded no minimum payment and offered an interactive device in the backseat of the cab that would let the passengers swipe their cards themselves and add tips as well.
New York's fare payment scheme is definitely a hit among cab riders considering how well they have been doing compared to other cities implementing the same service but using a different scheme. For instance, cabs in Los Angeles have the credit card machines at the front seat of the cab. Thus, when the cab's passenger pays for the fare with a credit card, he or she has to surrender his or her card to the driver. This year, the taxi industry in Los Angeles is off by around 15% according to taxi fleet owners. This mirrors the taxi industry's national trend.
In contrast, revenues of the taxi industry in New York have risen by around 13% compared to the end of last year. This is according to New York's Taxi and Limousine Commission's collected data. Tips are also averaging at 22% compared to the 10% average when cab fare payments were limited only to cash.