Tuesday, January 13, 2009

Cash or Credit?

A Guest Column by Zaid Hydari

Over a year ago, there was buzz around the city about ‘GPS’ and credit card machines in yellow cabs. Word on the street was that drivers were upset about the new technology, which lead to a series of strikes. Many people didn’t think twice about the issue – they either didn’t take cabs or found one pretty easily on the strike days, comforting themselves with what their scab told them about the new imposition of gadgets – the minority driver view that it’s fine, it may even increase business. The press, as usual, claimed to uphold journalistic integrity by presenting the issue neutrally – a concept that those of us born before yesterday know is unlikely, improbable, and almost never actually achieved. Instead, the press started writing stories about dishonest cabbies who would lie to passengers – saying the credit card machine doesn’t work or that there is a surcharge for using it. Anthony Ramirez of the Times wrote a piece detailing his experience trying to use a card in 92 cabs – of which 10 cabs allegedly made excuses and resisted. None of the press had the courage to tell the whole story – that drivers are getting screwed by the machines.

And then, after a few weeks, everyone pretty much forgot about the whole thing. GPS….credit cards….cabbies…whatever. If you don’t have cash, just swipe – all the hoopla is over.

Well, its not. To this day, drivers have suffered hardship due to the credit card machines. And this week, the City Council may take a very initial step in addressing the problem. Intro 705, which was first introduced in 2008, would allow for drivers to be merchant account holders.

You see, when a business wants to accept credit cards, they have to have a merchant account, which allows for the payment to be processed by the credit card company. A number of fees are involved, including a discount rate which is usually a percentage of each transaction. So a business actually gives up a small percentage of sales when someone uses a credit card– that’s why most bodegas and delis have a minimum – so they don’t have to give up a portion of the $2.80 you spend on Vitamin Water and a bag of the newest ‘Doritos Collisions’ flavor.

Most drivers lease their cabs from garages – and up until now the garage has been the merchant account holder for the credit card processing. So when you swipe in a cab – the garage gets the money – then takes 5% out of it and gives it to the driver. The 5% includes tip and tolls. They say 5% is for all those fees. But the reality is the fees don’t really amount to 5%. And the fees are only a percentage of the fare amount – not the tip and tolls.

Such small margins may seem negligible – but any hard working person knows that it all adds up. To a lot of money. And its not like Obama is about to hike drivers’ taxes because they make over $250,000/year. These are guys who drive 12 hours a day to make little money – the lease system is such that they pay the garage upfront – somewhere around $100 per day, and pay for gas themselves. What other jobs can you think of where you start off the day in the red? Their first few fares of a shift are just to break even.

Intro 705 won’t overhaul the whole industry and make the unjust system fair for drivers. They’ll still be disrespected public servants – not provided the benefits of city employees, like bus drivers and MTA workers. They will continue to be without health insurance. It will still NOT be a felony to assault a cab driver, resulting in continuous violent actions taken against these vulnerable workers. But Intro 705 is a baby step in the right direction.

The Transportation Committee will be having a public hearing on Intro 705 on Wednesday, January 14th at 12:30. Its on the 2nd Floor of City Hall. If you can – swing by and show the City Council that you support this initiative. Or call your Council Member. http://council.nyc.gov/html/members/members.shtml

Support Intro 705 however you can – because it’s the first step being taken to give drivers what is rightfully theirs.

1 comment:

Tom said...

It seems like the problem is with the unfair relationship between the garages and the cab drivers, not the machines themselves. Also, with regard to the fees for credit card use, there are a lot of costs associated with handling cash including where to store it, how to safely deposit it, taking time to count it, and of course the risk of being robbed. Credit cards help reduce those costs, which might make the percentage taken by the bank worth it. That doesn't make it right for the garages to charge the drivers a higher percentage than what is charged by the bank, but that seems to be a separate issue.