Sunday, April 24, 2011

Tip Prompting: Will It Make Drivers More Money?

I guess I'll add my two cents to the debate that has been well (but not totally) covered by John Han in TaxiTownsf. There are a few things  that John failed to touch upon.

Why the back-seat terminals?

The main reason why Deputy Director of Taxi Services Christiane Hayashi chose to have the VeriFone back-seat terminals installed was that she was convinced that customers would tip more because of tip prompting built into the PIM units.

It was supposed to be a classic Hayashi "something-for-everyone" scenario: the companies would save millions of dollars per year by not paying credit card fees. The drivers would make much more than the 5% that they would have to pay. "Win-Win."


What Hayashi failed to foresee was the hostility on the part of the drivers to the very idea of paying credit card fees at all. Most of them can't get beyond the fact that they have to pay 5% and simply don't believe VeriFone's claims.

In fact, I don't think I've seen minds this closed since my childhood in the 1950's when my neighbors were shocked by troublemakers claiming that black people were just as good as whites. An extreme example, it's true, but the sense of outrage and the unwilling to even entertain the possibility that Hayashi might be right are much the same. No less a personage than John Han himself told me that VeriFone's claims were wrong before he'd ever looked at one of their terminals.

Reason's for the Hostility

Most taxi companies, like Luxor and Yellow, are already coercing a minimum of 10% of their drivers incomes in the forms of tips and other scams. The drivers can't or won't complain about this because they are afraid of not being able to get a shift or of being fired.

You add another 5% to this 10% and figure becomes substantial - almost like a social security tax. But, this 5% is dictated by the MTA, not the companies, so it give the drivers a safe outlet for their frustration and their fury. They can scream all they want at Chris Hayashi or Nat Ford and still keep their jobs.

Another source of angst are the merchant accounts set up by Yellow and Luxor that reputedly hit the drivers up for bogus fees and charges.

What Me Worry?

It has been pointed out that I'm not only a medallion holder but I work for Green Cab. Now - that's what I call a "win-win" in this situation. I don't have to pay any fees and, according to Han's post, in the long run I could end up befitting in other ways.

However, being out of the line of fire does have it's good points. Not having a direct stake (at least not in the short term) in the debate allows me to keep a calm frame of mind. I can perhaps look at both sides of the question without becoming hysterical.

Anecdotal Evidence -  Drivers

I'm getting second hand reports of drivers claiming that they are getting tipped less than they were before and that they are sometimes being stiffed. And, I'm sure that John Han will soon regal his readers with more such tales.

But, I confess that I'm a bit dubious about these claims. Not that I doubt their truth. What I'm not sure of is whether or not they mean anything. I have some questions:

  • Do the people making these claims actually keep records of their tips from the past?
  • Have they never been stiffed before on a credit card?
  • Attitude is so important in getting a tip. Are these drivers saying things like, "the damn companies are screwin' us again. They made us install these effing back-seat terminals. Nobody's tippin' me. You got cash?" Such outbursts might have a negative effect on your income.
  • Do you realize that this is April? The slowest month of the year. For those of you who keep records, do you get the same tips in April that you do in October.
The fact is that it would take about three to six months to make a study that meant anything and at least a month to make a meaningful comparison between those with back-seat terminals and those without. 

Fortunately, we have just such a study taking place.  And, if those of you who do keep records (especially before and after back-seat terminal records) could make them available, an answer to the question - Do the back-seat terminals stimulate more 5% in tips? - might be found.

Personally, I'm looking forward to finding the truth. If the back-seat terminals actually do improve driver income, I'm going to urge Green to put them in.

Anecdotal Evidence - My Own Experience

The above image of the bitching cab driver didn't come solely from my imagination. I've had a number of customers lately who have complained about drivers with the back-seat terminals either whining about the units or refusing to take credit cards.

"I'd have given him a big tip," one attractive woman told me, "but the jerk wouldn't take my card."

Instead, she gave the big tip to me. In fact, my tips from customers who'd been whinged at by back-seat terminal cab drivers is about 10% above normal.

Not that I'd be so dictatorial as to suggest a change in attitude among other drivers.

I've started keeping records and my own experience of using a dashboard PIM unit is that I get tipped better in cash. I mean, a random customer might throw a twenty at me for an $8.50 ride but this almost never happens on a credit card.  I'd estimate that my credit card tips are about 10% less than my cash tips and also about 10% less than I thought they'd be.

But ... it's still April.

Anecdotal Evidence - New Yorkers

For whatever it's worth, I've been asking both New Yorkers and frequent Big Apple visitors what they thought of the back-seat terminals. The response has generally been enthusiastically in favor of them. The only complaint has been about the advertising. One woman told me that the first thing she does when she gets in the cab is turn off the damn TV.

Without exception, the dozen or so people I queried said that they tipped more on the back-seat terminals. This is an option that is backed up by UTW Rua Graffis  (hardly a Hansu Kim groupie) who says that New York drivers tell her that, indeed, they get tipped better than they did BT - before back-seat terminals.


  1. Ed this a very disappointing blog... Again you've failed to become hysterical.

  2. Yeah - I know. I just don't fit in. I've tried therapy but nothing seems to work.

  3. Stop such things against the drivers. They are intelligent enough to understand the truth.

    $ 7 fare with card in the hand of the driver,
    result either $ 9 or $ 10 which is 30 to 42 %.
    Leave it to the customer hand swipe and he will add maximum of 20 % which is $ 1.40 No one is
    tipping 30 % while using back seat terminal.
    Someone is doing utmost to sell the product and make money for himself. No one brain is block
    to understand and talk, it is all your mind problem. I have walked to several drivers
    and 80 % of them told me - no, not much tips.
    Bye (Tariq)

  4. What no one is mentioning is the fact that A CERTAIN number of passengers WOULD NOT BE IN YOUR CAB AT ALL if not for the use of credit cards. Imagine, I don't have much cash on me, I think I'll take BART to the airport this time. YOU DO MAKE MORE MONEY EVEN ...IF AFTER A SMALL DISCOUNT.

  5. I have said it before: Why would any driver in his/her right mind turn down a load because he/she will only get %95? It's not better than being empty?
    Anybody with two weeks experience should know that it's just a card game. Any load could be taking you right to that Palo Alto trip.
    If you only took two CC loads for $20 minus the 5% that would pay more than all CC costs in one shift.

  6. I am certain I will loose tip money. I get a very good percentage of my income from tips via being able to wrangle drunks so they love me, talking to people, etc. If they swipe their card and are given 3 options for tips with an alternate button to go through a process to add more who's gonna pick the difficult option?! no one. I get good tips all the time on CC I vote a big fat no to these terminals.