Correction: Sorry Royal

Awhile ago, I wrote a post that accused Royal Cab of being one of the companies that illegally charges their drivers for cashing credit card receipts.

It has since come to my attention that my information was incorrect.

Royal only cashes the receipts on Wednesdays. They do not charge for this service. However, if a driver doesn't want to wait until Wednesday, he or she can put the receipts through on a VeriFone account for which there is a 5% charge.

I'd like to apologize to Chris Sweis, the CEO of Royal Cab, for not researching my article more thoroughly.

Back Seat Terminals: Demonstrated

Athan Rebelos (photo, person) and Hansu Kim (photo, hands) were kind enough to show me the VeriFone PIMs at Desoto Cab Thursday.

I now understand that I made some mistakes in my previous post on the subject. For one thing, the terminals will broadcast ABC news feeds so, indeed, they can be described as TVs. (I'll mention another misconception later in the post.)

I came as a skeptic. I wasn't convinced that customers would tip more and I was very concerned about drivers not being able to control the sound.

In fact, I felt that, if I couldn't turn off the sound, I didn't want the damn thing in my cab.

The truth, as it turns out, isn't quite so simple.

• There are sound control arrows on the front seat terminal that Athan is pointing at in the picture and the driver can turn the sound all the way off.
• The ads and the public service announcements will NOT have sound.
• However - the caveat - the customer can turn on the sound for the news if he or she wants to and it overrides the driver's control.

But, the speakers are on the back of the suicide seat so they point away from the driver, meaning that the sound is fairly low when it is on. Furthermore:

• The system resets with each new fare so the sound should not remain on after a customer leaves.
• From talking to customers who have used the terminals in NYC, the first thing most of them do is turn off the sound if it is on anyway.
• So very few customers are likely to turn the sound on at all.

Conclusion: the sound at worst should be a minor annoyance.

What about the 5%? Will the tipping prompts really give the drivers more money?


The terminals have prompts that encourage the customers to tip well. If the fare is low (under $10?), they are prompted to tip $2, $3 or Other (photo).

On longer rides, the customers are prompted to hit 20% or Other. In addition, the 20% is calculated to include any extras such as airport or bridge tolls.

Hansu Kim says that studies have shown that customers tip up to 30% higher than they would without the prompts.

I don't know if I quite buy this. After all they are studying a novelty. Once the newness wears off, the tipping will probably level off as well.

On the other hand, the natural thing to do with these screens is to hit the $2 or the 20% buttons.

There is also the fact that (at VeriFone anyway) the customers do not have to sign the receipt for under $25. In fact, according to Mr. Kim the minimum for a signature is now going up to $50. This makes taking a credit card almost as fast as cash. The customers like this and, if the customers are happy, they tend to tip more.

In short, tt's hard for me to see how the tipping on these terminal would not more than the cover 5% drivers are to be charged for cashing the receipts - even in a worst case scenario.

For drivers at Town Taxi and Checker, even covering the 5% would be a huge improvement by itself. And, who knows? The drivers (other than Green's) at Citywide Dispatch might even start accepting credit card calls.

Why should the drivers be charged at all?

1. As I've mentioned, many of them are already being overcharged now.
2. The use of credit cards is expanding rapidly with huge costs to the companies. These PIMS will allow them to recover their costs.
3. The drivers should make more money.
4. The public should be better served.

The Merchant Accounts


There have been some complaints from drivers about these accounts - mostly due to the delay in being able to use the funds.

The normal hold on the money is 24 hours to 48 hours. On three day weekends, this can mean up to 4 days without the drivers being able to touch their money.

However, Hansu Kim says, that with a month or two, VeriFone will start "instantaneously crediting the driver's accounts," meaning that there will no longer be any hold on the funds..

It should also be kept in mind that these accounts have been set up so that the taxi companies can't touch the money and thus the unscrupulous companies amongst them will be unable to misappropriate the funds.

Advertising Revenue

As previously reported, 90% of the revenue will go the vendors and 10% will go to the drivers. The companies will NOT get a share.

On top of this, it will probably take three years before anybody makes a profit off the revenue. VeriFone estimates that it will take that long for the advertising money to cover the installation costs.

One More Thing


Contrary to rumor (spread partially by me) Hansu Kim says that he does not own shares in VeriFone. He says he is a paid consultant for the company and will neither receive a commission nor in any way make a personal profit from the sale of the units.

Kim also says that VeriFone will not hold a monopoly on the systems. CMT (being used by Luxor) and Wireless Edge will also be involved.

On the Back-seat Terminals: Some Facts?

There is a lot to be said about the back-seat terminals (photo) currently being installed by National, Luxor and Yellow Cabs. Some of it might even be true. (See TaxiTownSF.)

But there are some misconceptions.  I don't claim to be an expert but I will try to clarify a few points.

1. It's not a TV, it's a video terminal and a card swipe.  According to Chris Hayashi, it will have no audio. It will, however, carry advertisements and public service messages. I don't know if it can be turned on and off by the customer.

2. The taxi companies WILL NOT pay for the terminals. The vendors will pay for all equipment and pay for their costs out of the fees collected and advertising revenue.

3. The cab companies WILL NOT share any advertising revenue with the drivers. The vendors will get 90% of the profits above the installation costs and 10% will go to the Drivers Fund.

4. The taxi companies ARE NOT currently allowed to be merchants for credit card accounts ( for obvious reasons), although some companies are requesting the SFMTA to be allowed to be merchant account holders themselves.  The actual cost of the merchant account is closer to 3%, so there is potential profit involved.

5. Despite it's prominence in the field, Verifone will probably not be the only vendor. Any company that meets certain standards set by the MTA could qualify. CMT and Wireless Edge are also planning to compete.

6. Although drivers are required by law to take credit cars, I notice that there is no regulation that says that a driver MUST use a specific credit card cashing system, especially since the drivers are not employees. Drivers are free cash them anywhere or any way they like.

• Many drivers - especially those at Desoto Cab already have their own merchant accounts.
• For drivers with smart phones Square - which is a free and charges 2.75% - is a good option.
• There are other companies on the market with similar or possibly lower rates such as Obopay which claims to charge only 1.5% per transaction and doesn't need a swipe.
• I understand that the Russian speaking lady near Checker Cab will still be happy to cash receipts for 10%.

7. Taxi companies have the option of not putting in the terminals in which case they are responsible for paying to cash the credit card receipts.

MHA 2010 Meeting

The Medallion Holders Association held its annual meeting Monday at the Mars Bar and Cafe.

A nice buffet which included hot wings, hors d'oeuvres and delicious hamburgers seemed to be enjoyed by just about everybody. Board member Mike Spain briefly summarized his plan for peak-time medallions and President Carl Macmurdo discussed various subjects and strategies important to the members. But the highlight of the evening was an appearance by Deputy Director of Taxi Services Christiane Hayashi.

Showing her usual charm and charisma, the director fielded questions and used them as a springboard to express her thinking on various topics. Not necessarily in order, these included:

The Fixed Price for Selling Medallions.

Hayashi said that she liked the fixed price because:

• It's unique to San Francisco and other cities have shown an interest in it.
• The price is low enough to be affordable for drivers. 
• It thus allows buyers to get reasonable loan options.

She pointed that in New York, where medallions often sell for $500,000 or more, only high interest loans with balloon payments are available and that buyers rarely succeed in paying off their loans.

One medallion holder said that the $150,000 that a holder would clear by selling the medallion would not be enough to retire on.

Ms. Hayashi responded by saying that the medallion sales were never intended to be a retirement but rather a way to help people retire in conjunction with other savings.

She added that she didn't expect the Fixed Price to go over $300,000. Otherwise medallions would no longer remain affordable for working drivers.

Peak-Time Medallions

After hearing plans about peak-time medallions for as long as I've been in the cab business, it looks like an idea whose time has come.

Director Hayashi said that people in city government wanted to see it happen so it will - probably early next year.

Various plans for how this will happen are being discussed at TAC but she did say that her plan called for the peak-time medallions to be leased from the MTA.

Not, on the other hand, a popular idea among MHA members.

Watch Those Flashers

Medallion holder Norma Greer had recently written to Hayashi about being harassed by a policeman when she tried to drop in a bus stop. The cop also threatened to cite her for using her flashers illegally.

The director said that she looked up the law and there is indeed an obscure vehicle code against using the flashers for anything except emergencies.

Hayashi said that it was legal to drop in a bus stop - as long you pull "as far forward as possible." She also said that she would discuss enforcement policy with the PCOs (meter maids).

In the meantime, she added that you should fight any such tickets and report the incidents to her office. It's also helpful to get the badge number of the officer involved.


Electronic Waybills and Credit Cards

Hayashi said all taxis would probably have electronic waybills installed by the first quarter of 2011. She added that Luxor and Yellow Cab were already equipped to handle them right now.

She expressed enthusiasm for the new technology because "we'll be able to gather accurate information" about the number of rides and so forth "for the first time ever." This could prove invaluable to the Controller's office in helping to figure out how to improve taxi service.

Ms. Hayashi also said that systems for handling credit cards would be installed on the back seat of some cabs at the option of each company.  One such system, VeriFone, would:

• Allow the customers to swipe the cards themselves.
• Prompt the customer for a tip.
• Automatically transfer the funds into a driver's bank account.

There would be a 5% charge to the driver but Hayashi says that studies have shown that drivers make more than the additional 5% off the tips because of the prompting.

She also said owners and medallion holders could use other systems if they wanted - citing Yellow Cab that has chosen to keep their own system - but, in such cases, it would be illegal to pass the credit card charges onto the drivers.

This naturally segued into ...

Calling 311

Director Hayashi went on to say that every cab driver in San Francisco was required to take credit cards and, if they didn't, other drivers should report the culprits on 311. She also added other crimes such as being rude to customers or reckless driving to the list of things that should be reported.

So ... next time you see a cab driver holding up a customer with a Uzi be sure to call 311.

(Okay. Okay. Off with the sarcasm.)

I did point out to Hayashi that my information was that the taxi drivers, who were turning down credit cards, mostly drove for companies that were illegally charging the drivers 10% - 12% per transaction.

Hayashi said that we should let her know which companies were doing this.

Taking her at her word - the number to call (if your company is illegally charging you for credit card transactions) is 415.701.5235

In the past, Ms. Hayashi has promised anonymity and protection to any driver who makes a complaint against a company. I've never known her to go back on her word.