I was recently traveling on business and took a cab from DTLA to LAX. The cab driver was very friendly and we talked about a myriad of topics including, but not limited to, the time he transported Saudi doctors and they forgot $40,000 in a suitcase in the trunk (they got it back).
I am, by nature, very skeptical of shady taxi practices. I’ve had to bribe drivers to drive me places and pay them to bring back my keys. I am especially on edge when I’m taking a taxi on my company’s dime. The last thing I want is for the expense to get rejected on my expense report and I’m suddenly stuck with a $60 cab bill.
On this most recent trip I mentioned above, we arrived at LAX’s Terminal 6 and it was time to pay. I always use a corporate credit card and get a receipt.
This time the driver pulls out his cell phone and inserts a Square reader into his headphone jack. I’m very aware of Square and I trust the company, but being a fraud examiner by trade, you can imagine I’m analyzing the angle here. I’m wanting to know what would be a malicious reason for this cabbie to use Square rather than his regulated credit card machine. I couldn’t think of anything aside from credit card skimming, which is obviously a very serious concern.
Correct Me If I’m Wrong
The way it works is cabbies are required to produce the total amount of their fares for the day to the cab company. This number is calculated and batched by the meter you see on the cab’s dashboard.
In my case, the cabbie ran the meter as usual. No issues here.
At the end of the day (or week), the batch is ran and the cabbie is responsible for paying the cab company the total amount of his/her fares. Sometimes a customer pays with credit card and sometimes they pay with cash. The company will see the credit card transactions, but will need the cash to make up any gaps. Cabbies may use Square because of the lower credit card transaction fees when compared to their mounted card readers. They then report you paid with cash, pay the fare to the company, and pocket the savings on the fee. Note: The savings is miniscule at $1 or $2, but that can add up!
The company pays out the cabbie a commission or salary (structure varies) and then pays out the tips on a bi-monthly or monthly basis. The cabbie might just want the fare (and tip) in his/her bank account quicker than the company pays. I can deal with that.
I did a bit more research and found this quote from an article on GeekWire:
Belyou Dagnew, general manager for Orange Cab, said that some of her drivers use Square and added that Orange Cab is O.K. with the technology since its drivers are technically independent contractors. These drivers pay companies like Orange Cab to lease vehicles and then keep what they make off fares. But, when passengers use a credit card, drivers must pay for the processing fees.
Illegal in Some Places
Using any credit card reader besides the in-car mounted one is prohibited in some locales. In Washington, DC, for example, utilizing a mobile credit card reader like Square is illegal.
The reason, as explained here:
But using the device in Washington taxis is illegal because, among other reasons, it does not automatically transfer the District’s $.25-per-ride surcharge to the D.C. Taxicab Commission (DCTC) whose operations are funded solely through such fees.
In my case, I received an e-mail receipt from Square within seconds. The fare was $55 with a $7 tip so $62 total. My e-mailed receipt only showed the driver’s name, but no cab company, cab number, etc. I asked he print me a paper receipt and he did. The only problem there is my tip of $7 doesn’t show and my company might not pay out on the electronic receipt due to the lack of information. In this case he grabbed his business card with his cab company and filled out his name, cab number, and the total amount I paid. I included all three receipts for my expense report and it passed. Whew, what a hassle!
If this happens to you I wouldn’t worry, but it’s always a good idea to be skeptical. Here are some final tips:
- Ask the driver why he/she is using a mobile credit card reader
- Ask the driver if you can inspect the reader (to prevent skimming)
- Most of the time these credit card readers send instant receipts to your e-mail inbox so be sure to check for it before leaving
- Write down the driver’s name, cab number, plate number
- Ask the driver for a business card with his cab number, company, and signature
Any cabbies here? I’d love to hear your experience!