The power of buttons — NYC taxi tips take off

by Charlie Leocha on October 5, 2010

Nobody likes change. It seems that everyone looks at the problems with change rather than the opportunities. Such was the case with taxi drivers in New York City (NYC) when they were ordered to add credit card machines to their cabs two years ago. All they saw was the added five percent card processing fee and another hassle. In the end they were surprised and some cabbies are singing a happy tune on their way to the bank.

What was the big surprise? Tips. Yes, tips.

Tips are way up! Way up! Taxi drivers are making more money now than ever.

It seems that these new credit card machines have special tip shortcut buttons on them that can be set for a percentage (15 percent, 20 percent or 25 percent) or for a flat fee ($2, $3 or $4).

Passengers are far more generous when paying by credit card and having the buttons to push seems to be a suggestion for the proper tip, rather than a rough rounding up to the next even dollar amount in the old days.

How many passengers feel like cheapskates when the push the lowest tip level? Probably a lot. It’s human nature it seems, so tips are rising.

In the old days if the taxi fare was $3.50 most folk would add 50¢ and say, “Make it $4.” With the new machines even if a passenger decided to push the 15 percent tip button the taxi driver would make more and most passengers seem to be pushing the 20 or 25 percent tip button (in some cases, there isn’t even a 15 percent option).

The New York City Taxi and Limousine Commission (TLC) notes:

Currently, there are three technology vendors that provide options in percentages or dollar amounts dependant on the total fare. For the particular vendor that you highlight [in the image above], the system offers tip amounts in dollar increments of $2, $3, or $4 in cash for fare amounts that total under $15.00. If the fare amount surpasses the $15.00 fare, then the option transfers into percentages at 20%, 25%, and 30%.”

Is 20 percent the normal amount to tip a taxi driver? When did that become normal?

The taxi drivers are learning to love this system because of higher tips, but there is still some grumbling because tips were “off the books” and therefore non-taxable in the old days. Drivers still aren’t totally sure whether the increase in the tips is going to make up for the ability of authorities to tax the now-reported tips. Time will tell.

In the meantime, riders “interested in filing a complaint” can call (212) 639-9675, or 311 within New York City.

Have any readers experienced taxis that take credit cards? The system has been in place since 2007 in New York, though I’ve only paid with cash. Cabs with credit card machines have been used in Europe for years.

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Tagged as: credit cards, New York City, taxi cabs

  • Dennis Lewis

    When I visited South Florida in April, I was shocked that so few cabs in Miami accept credit cards … since it’s relatively easy to find a cab in Jacksonville that will take a Visa or MasterCard. Credit card usage has become so ubiquitous, I was surprised … in addition to the aforementioned shock … that Jacksonville cabbies are a step ahead of their Miami counterparts. I went down the entire row of cabs at Miami International without finding one that could take a card … and considering the number of international travelers who would probably prefer to charge a ride, especially if they hadn’t had time to exchange their home currency for dollars …

  • Matthew in NYC

    I moved to NYC from Australia in the mid-2000s. At that time every single cab in the major cities of Australia took credit cards, however, they were allowed to add a surcharge of 10% to cover the costs of operating the credit card machine (tipping taxi drivers is not common in Australia). On my most recent visit to Oz, there were news items that made it clear that in Melbourne at least, a driver can be fined if s/he goes on the road without a working credit card terminal.

    Despite the fact that cash tips may have been underreported to the IRS, that doesn’t mean they are or were tax free. Tax authorities world wide have estimates on what level of tips should be paid by whom. I can only presume that taxi drivers get such low level pay, they IRS didn’t think they were worth going after.

    When credit cards first came into NYC cabs, they’d grumble and demand to know why they should accept my corporate credit card. Answer: I’ll tip you if I pay by cc but not if I pay cash. The grumbling stopped.

    As the credit cards become more widely accepted in cabs, I think more companies will insist that employees with corporate credit cards use cabs in preference to more expensive car services. That will also be a boon to cab drivers who may find their wait time at La Guardia and JFK aiports goes down.

  • L

    I feel like this boosts the sense of entitlement a bit. My last trip from Manhattan to JFK I chose to tip only $5 (10%) because the guy was driving erratically and talking on the phone the whole time (it’s up on the taxicab rules posted in every cab that they’re not allowed to do that). After he started yelling at me about how they have to pay an amount for credit card fees I caved and gave him another $3-5 in cash. The credit card fee should be included as a surcharge so that 1) customers are aware that the driver doesn’t get this money and give a sufficient tip when it’s earned and 2) unsafe cab drivers who are doing a bad job don’t successfully bully a (then) timid college girl out of money.

  • J

    I don’t know how many cabbies were interviewed for this report – but I can tell you that tips are NOT up.

    My father has been a NYC taxi driver for 40 years and he’s never seen so many crap tips. His fellow drivers are also reporting the same thing. He’ll get a $20 or $30 ride and people will put in a single dollar and avoid the percentage option. On top of the 5% fee to utilize the credit card machine, he ends up LOSING money – not making more.

    People are being super cheap all around in NYC – not just cab drivers but restaurants and bartenders too. Don’t go out if you’re not willing to pay for service and that includes the guy who gets you from point A to point B safely and has to cough up money for the credit card fee and gas.

  • Pingback: Why Do Cab Drivers Hate Credit Cards So Much?

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