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Bumpy Credit Card Rollout In D.C. Cabs Shines Light On Deal That Never Was

D.C. cab drivers have until Dec. 1 to install credit card payment devices in their backseats.
Andy Melton: http://www.flickr.com/photos/87054972@N00/4920759830
D.C. cab drivers have until Dec. 1 to install credit card payment devices in their backseats.

As the next major modernization deadline nears, D.C. taxi drivers still are grappling with an array of changes that have included the bumpy start to universal credit card acceptance. By Dec. 1 all Washington cabs must have a back-seat console that accepts credit card swipes; many cabs currently have tablets or smartphones attached to their dashboards.

The reforms — from new dome lights to smart meters that track trip data — spurred by public demand and imposed by the D.C. Taxicab Commission have so rankled drivers than more than 1,000 cabbies have joined an association with the Teamsters. The union unsuccessfully has demanded an end to the towing of cabs not in compliance and more driver representation on the commission.

One vendor the answer?
The early problems are leading some observers to pose a “what if” scenario: what if the District’s original plan to use one vendor to process credit card payments in the city’s fleet of 6,500 cabs had not been shot down? A contract was awarded to VeriFone — a company whose credit card readers are in thousands of New York City taxis — in mid-2012. But the company's $35 million bid in Washington was struck down by a panel of judges because the contracting process was flawed by "pervasive improprieties."

The D.C. Taxicab Commission responded by opening up the field. Eight companies — known as payment service providers or PSPs — were approved to operate in the District. One has since gone out of business, leaving more than 900 drivers looking for a replacement for their now useless (and expensive) equipment.

The varying quality of the payment solutions accounts for the inconsistency of the customer experience. You may hail a taxi driver with a modern back seat console that promptly processes your credit card swipe, or you may get stuck with one of the many drivers struggling with glitchy equipment. In the latter case, cabbies have been accepting only cash or using the mobile card reader Square instead, both of which are illegal under the new regulatory regime.

Some of the PSPs are startups with small staffs lacking the managerial capacity to promptly handle drivers’ complaints. One PSP, Gleike Taximeters, a French firm, has no permanent D.C. office and its manager is suing two D.C. cab fleets for breach of contract, threatening to dismantle the drivers’ payment systems.

So what if VeriFone, a large, proven company, had survived the challenge to its $35 million bid mounted by two of its competitors? Taxicab Commission Chairman Ron Linton declined to speculate if the transition to credit card payments might have been smoother.

“That’s a hypothesis. I don’t know,” Linton said. “You’re asking me to say if something else had happened, then?”

When asked if a tech startup could have been expected to handle taxi fleets, Linton responded, “Everybody could have said that about Amazon.com, too. They were a startup that didn’t have much staff but look at it today.”

Some PSPs better than others
At least one taxicab company believes it would have been a mistake to use just one vendor. Yellow Cab Company, the owner of more than 500 cabs, already had its own credit card solution and was forced to retrofit its system to meet the new regulations.

“We are a dispatching company and we serve a number of different customers and provide a number of different services. Having a one-solution-for-all would have hindered our business considerable,” said Roy Spooner, Yellow Cab’s general manager. “A single approach in any service or competitive environment is not the solution.”

Spooner said the District could have mandated credit card payments without limiting their options to a certain number of PSPs, adding that the technology to track trip data in taximeters, for instance, needed more time to be tested and developed before the Sept. 1 deadline.

“All PSPs in some form or fashion are experiencing some type of difficulty in trying to deploy their equipment, even the big ones like CMT and VeriFone. They may not be as pronounced as others, but I think the complexity of the rollout in the time frame we had to work with may be a contributing issue.”

Chairman Linton said taxi drivers and their fleets opposed to the VeriFone contract wanted more than one choice, and some simply have chosen poorly.

“These drivers went to a PSP that offered them no out-of-pocket cost, what sounded like a really good deal, and when they took it they found out it wasn’t such a good deal,” he said.

Critics of the new credit card payment system say the modernization regulations are less concerned with customer convenience than tracking drivers' trips and collecting the taxicab commission's $.25 surcharge.

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