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First strike against smart cards!

Week 37, 2007

New York City taxicabs are being equipped with an assortment of customer service-intensive technology-based improvements that include a GPS-based interactive electronic passenger map and information screen, and credit/debit card acceptance, with the support of MasterCard PayPass.  Other enhancements provide drivers with both business opportunities and important emergency information while electronically replacing the handwritten trip sheet. Verifone is among the four companies selected to provide the new equipments (cf. Smart Insights #07-23). New York city has 44,000 licensed drivers and 13,000 cabs. Verifone expects to have installed about 5,000 systems by year end.

But even if this system sounds nice, it does no satisfy the ones who are concerned in the first place: the taxi drivers. The New York Taxi Workers Alliance, which claims to represent more than 8,400 drivers, called on drivers to strike beginning of September in protest of plans requiring cab owners, beginning by October, to install the new terminals. New York City taxi drivers protested against credit- and debit-card payment systems in the back seats of their cabs: they feared they would lose money on tips if passengers didn't pay in cash. Taxi drivers also fear the GPS systems, which will let riders follow the cab’s route, also will let cab owners monitor their movements. And of course, they complain about the transaction cost when have to accept cards.

Payment card acceptance is always an issue in taxis anywhere in the world. Even when taxi companies or taxi public authorities impose drivers to accept payment cads, they are generally reluctant to do so, either by fear of loosing tips or because of the transaction fees, or simply to escape a complete reporting of their activities.

The same system has been in operation in Philadelphia for a few months. It met strikes there too. And now, Philadelphia cab drivers keep on protesting against reliability of the system, GPS issues, relation to the dispatch center, etc…. But, they are now used to accepting payment cards.

So is this the first strike against smart cards? Not really. It's a strike against a system imposed by an Authority without taking enough care of users requirements and without spending enough time to explain the users the benefits they can get from the system. It will need some adjustment over time before everything runs smoothly. But in a few months, when a taxi driver will ask his customer "cash or card?", he will have nothing in mind but to know if he has to look for change or not.

Thierry Spanjaard
Chief Editor
Smart Insights