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SFMTA’s plan to steer cabs from cash course to plastic wins few fans

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Money troubles: The SFMTA is considering cutting taxi drivers’ credit card fees from 5 percent to 3.5 percent in hopes of encouraging drivers to accept plastic payments. - MIKE KOOZMIN/THE S.F. EXAMINER
  • Mike Koozmin/The S.F. Examiner
  • Money troubles: The SFMTA is considering cutting taxi drivers’ credit card fees from 5 percent to 3.5 percent in hopes of encouraging drivers to accept plastic payments.

The contentious issue of credit card fees in San Francisco taxis, which has resulted in plastic-carrying riders being shunned, could be resolved Tuesday, though neither cabdrivers nor cab companies are pleased with the proposal.

For the past two years, cab companies have been able to pass off 5 percent of their credit card processing fees to drivers. Cabbies say the 5 percent comes out of their income, while companies respond that it’s necessary to cover the costs of the growing usage of plastic by passengers.

As The San Francisco Examiner reported in December, the result has been that cabdrivers, who are mandated to accept credit cards as payment, will regularly avoid passengers looking to charge their fares or say their payment machines are broken and can only accept cash.

As a result of the unpopular  5 percent charge, the San Francisco Municipal Transportation Agency, which regulates cabs, has recommended a proposal to cap credit card fees at 3.5 percent for drivers. The plan also includes stipulations that drivers will be allowed to use their own processing equipment, such as Square for smartphones, and that all cabs will be outfitted with standard back-seat credit card machines. The agency’s board of directors is scheduled to vote on the proposal Tuesday.

Paul Rose, spokesman for the SFMTA, said the fee decrease for drivers would improve customer service by ensuring that credit cards will be accepted in all San Francisco cabs. He also said many other metropolitan areas are considering similar measures to lower the rate that drivers have to pay.

Mark Gruberg, spokesman for United Taxicab Workers, a drivers’ organization, said the 3.5 percent fee is still too prohibitive for cabbies, many of whom struggle to earn a living in the hypercompetitive San Francisco market.
“It’s been proven that companies can absorb these costs,” Gruberg said. “These credit card fees should be invisible to both the driver and the passenger.”

Athan Rebelos, general manager at DeSoto Cab, said that an independent processor — Verifone — takes in all the processing fees, since the company pays for installation, maintenance and repairs of the credit card machines. If the fees to drivers are reduced to 3.5 percent, Verifone will pass on those extra costs to cab companies, which will not be able to afford it, Rebelos said.

“We’re not a bank; we don’t have the economies of scale to afford these credit card fees,” Rebelos said.

If the companies cannot make a profit, they’ll be forced to increase their drivers’ gate fees — the daily charge that cabbies must pay to use a company vehicle.

While the drivers and companies bicker about credit card fees, taxi passengers will continue to feel the impact of the argument. Some drivers, angry about absorbing the extra costs, are still refusing to pick up passengers who don’t have cash.

Sam Codo, a San Francisco resident, said a cabdriver began cursing at him after he attempted to pay a $10 fare with a credit card on St. Patrick’s Day. The driver told Codo he would have to pay double if he used his card, since it was a holiday.

Codo refused to do so, and even after he paid the driver $15 in cash, the cabbie continued to yell at him, eventually spitting at him before driving off.

“He was completely nice and normal until we tried to pay with a card,” Codo said. “And then he just snapped. It was a complete 180.”

wreisman@sfexaminer.com

Taxi caravan to protest policies

Miffed taxi drivers plan to parade around City Hall in a caravan of vehicles today to protest proposed industry policies.

Drivers are upset about onerous credit card fees, government overregulation and the feeling that The City is using cabs as cash cows, according to Mark Gruberg, spokesman for United Taxicab Workers, an advocacy organization.

Gruberg said there is plenty of discontent about the San Francisco Municipal Transportation Agency’s medallion sales pilot program. Some owners of medallions — permits that allow holders to lease out their cars — can sell their wares for $250,000, of which the SFMTA gets a 15 percent cut. Gruberg said the agency hasn’t invested any of that money back into the industry.

The protest is scheduled to begin at noon, and will entail taxis circling around City Hall before heading out together in a unified direction.  The drivers will not be picking up fares at that time. Gruberg said
he expects a strong showing of drivers participating in the demonstration.

— Will Reisman