Wes Hollis is proprietor of Executive Cab. He sent in this article as a response to Ed Healy's blog, "Credit Card Charges: Illegal"
I have had a merchant credit card account for 10 years. My lease drivers pay their gate fees with their credit card sales.
My credit card processer is NPC in Louisville, KY. NPC handles Visa, MC, and Discover. American Express does their own credit card processing. My monthly cost with NPC is 7.5%. My monthly cost with American Express is 10%. I have the monthly statements to back up these figures. This past month my credit card processing expense was $175.00.
Yet, I have never charged my drivers for these fees. I give them 100%, dollar for dollar credit on their credit card sales.
To set the record straight, Town Taxi has always charged a flat 5% on their credit card sales. I have to turn in my MDT credit card sales to Town Taxi. Town’s drivers are likewise charged a flat 5% on their credit card sales.
In light of what I have to pay on my merchant account, 5% is a bargain. You have to realize that Town Taxi has numerous additional expenses that I don’t have. They have to pay for the cell phone air time. They had to purchase a dedicated, secure phone line and server. There are ongoing maintenance costs for that computer equipment. They have to have one extra person in the dispatch office just to handle all of the credit card sales paperwork (annual payroll expense of $40,000. +).
I find it difficult to believe that Verifone is not taking a deduction from DeSoto, National, or Royal drivers’ credit card sales. If their drivers are getting 100% reimbursement on their credit card sales, then DeSoto, National, and Royal are undoubtedly being charged well over 5% on their credit card sales. Let’s take a minute and review the new expenses that have been heaped on cab companies since 1998 (the past 13 years).
· Gate fee limits.
· “Green” car requirements, age, and mileage limitations on vehicles. These rules have more than doubled a cab company’s vehicle acquisition expense.
· Having to purchase and maintain security cameras.
· Having to purchase and maintain Mobile Data Terminals and taxi meters with built-in receipt printers.
· Having to purchase and maintain a computerized dispatch system (this should be a requirement for all large dispatch services).
· The expense of certain replacement parts on our “green” vehicles.
· Bi-annual inspections for vehicles with more than 200,000 miles on them.
· The color scheme renewal fee has tripled since 1998.
· Fines for misdeeds that have increased tenfold or more, to a point where they are so unrealistic it is mind boggling.
· Credit card processing fees, and the payroll expense for someone to handle all that extra paperwork.
· The expense of re-painting the roof, trunk lid, or hood of a cab when it is changed from a regular cab to a spare (the paint comes off with those 18” high numbers).
· The expense of a “smart” cell phone that lives in the cab, and the ongoing expense of the cell phone service ($65 a month, for me), so that the lease drivers can have access to Cabulous customers. The expense (for some of us) of having factory in-dash navigation units, to prevent the drivers from sticking those tiny, portable navigation units on the inside of the windshield.
Small wonder one cab company after another is going broke. The substitution of electronic payment for goods and services rather than cash is an irreversible cultural phenomenon. And as such, the burden of the expense of this change should be shared by all parties involved. All cab drivers are entrepreneurs in their own right. San Francisco’s government makes this official by charging them an annual business tax.
In my opinion, it is not unreasonable to ask drivers to pick up 5% of the credit card sales expense as one of their costs of doing business.
This, plus the current cost of gasoline, makes an immediate meter increase an imperative.