Sunday, February 28, 2016

Tariff Update...As Clear As Mud. Credit Card Surcharge Change?

Driver to pay Credit Card surcharge from April???


I spoke to LTDA Chairman Steve McNamara on Wednesday and in that conversation he informed me (in his opinion) the argument over surcharges is irrelevant as rules governing CC transactions including surcharges, may well be change in 2017 due to an EU directive. 

The information is actually contained in the results from TfL's consultation on Credit Card Payments.

The actual wording states:
The current surcharge of up to 10 per cent is generally felt to be too high, but the Consumer Rights (Payment Surcharges) Regulations 2012 already bans excessive surcharges and traders, including taxi drivers, may not charge more than it costs them to accept card payments.

This is pretty clear so far and quite understandable.

The report continues to say:
It is also expected that future legislation (Following adoption by the European Parliament of the Revised Directive on Payment Services), will remove most card payment surcharges when it comes into effect which is expected to be by end of 2017. 

The statement is unspecific as to which "most card payments" are referred to. 
Also, this may not happen,because by 2017, we may no longer be part of the EU. 

So why are TfL pushing for something so strong, that may never happen?

Until this actually happens, why should we even consider passing CC payment surcharges over to the driver?

How would this 2017 European consumer rights regulation affect us here in the UK?

This will mean retailers will not be able to charge cc customers the surcharge or service charge. 
This will include paying bills, booking theatre tickets, shop purchases and the like of us. But most retailers will build this into the retail price of the goods being sold.

TfL have offered us a 20p extra to the initial meter drop, but that was based on a CC surcharge capped at 3%. 
Now we are told that the Card clearing companies have turned this down and TfL are going to let market forces set the rate.

Why is there such a lack of information from our orgs about what is coming in April, in regards to CC surcharge payments?

Is this another example from TfL's spin doctors of while we are tearing into each other over this, something else more controversial is about to slip under the radar. 

Perhaps TfL feel that if we are arguing about something that's possibly inevitable, we won't be resisting the  unenforceable CC mandate -about to be tested in court I hear- or the unnecessary fitting of equipment in the rear.

The way TfL have tried to bulldoze this through based on their consultation is nothing short of scandalous. 

This whole issue has been a complete mess from start to now and has been handled dreadfully by the Orgs/Unions, suppliers and TfL.

Too many vested interests looking at grabbing larger market share, stirring the already muddy waters. 
A complete  

The TfL consultation result recommendations should be based on majority of opinions from those who responded. It's clear that this is not the case.

It's alleged TfL are trying to manipulate the conclusions by making the results unclear. 

See for yourselves and make your own mind up:

7 comments:

j a jenkins said...

this was inevetable as you cant run a buisness on a 3% profit margin, i asked TFL that we should be able to still charge the surcharge based on the hmrc website that levys a surcharge for paying your income tax by cc. also i asked that we should be allowed to take payment before a journey starts as this will stop the fraudlent transactions, and also as this is a TFL directive, ie you can't travel on the tube or the buses without paying first and we fall under that umberella. also there is one other situation that arises, that is why should a cash paying customer have to pay the 20p flag drop, surely this is a matter to be addressed?

xXMoney KillerXx said...

With the legal debate still to be decided over the mandating of credit cards in taxi's, plus the maximum 3% charge to drivers being thrown out - there is a win win solution.

Having the facility to accept credit cards with a fixed terminal, will obviously be the provision to provide WiFi. This should be freely available to all users of taxis, regardless of how they choose to pay. The providers could sell the advertising space, maybe showing 30 second videos every 5 minutes, as a condition of the free WiFi. The money raised by the providers could cover the hardware, software and processing fees. It's a win win. We would become the world's first taxi fleet that provides free WiFi for ALL users. As drivers, we wouldn't, effectively, take a pay cut whilst TfL force through the mandating of credit cards.

I personally am very pro credit cards, and believe all taxi's should have the facility. But charging drivers for the privilege is not the way forward. Incentives such as free WiFi, and zero charge to the driver is a truly viable option the providers should take a serious look at. If one of the providers were to go ahead with this, and guarantee a lifetime of no processing fees to the drivers, they have a great product of 22,000 taxi's to sell to potential advertisers.

This would be a positive step forward for the taxi trade in London. I believe that TfL and the trade organisations should take this proposal forward. Taking credit cards is the right thing to do for the good of the trade. Being forced to take a pay cut, no matter how TfL spin it, is not for the good of the trade.

Damian said...

2.75% charge is easily obtainable through a number of different vendors. It's also easily covered by present fares IMO but the extra 20p will be a welcome bonus. Apart from fixing the machine in the passenger compartment I'm all for the cc legislation.

Imagine we could all work together (Yes I know, bare with me!) If 25,000 of us rocked up to a CC company together we could broker a deal down to the 1.4/1.5% that large companies currently pay. Some probably less, I bet someone like Sainsburys pays less than 1%. BTW when you pay cash at any establishment that accepts CC without charge you are subsidising those who pay by CC. It's the way of the world.

j a jenkins said...

I THINK YOU HAVE MISSED THE POINT, WHY SHOULD WE BARE THE COST OF CC, WHEN EVERY OTHER INDUSTRY CHARGES IT, ITS PUT ON THE PRICE OF THE GOODS, AND WHY SHOULD A GOVERMENT AGENCY ENFORCE IT ON US, AND THEN DEMANDS WE PAY IT WHEN MAKING A TAX PAYMENT. ALSO I HAVE BEEN TAKING CC FOR OVER 20 YEARS SO I AM PRO CC NOT AGAINST THEM. BUT THERE HAS TO BE NEGOTIATIONS TO MAKE SURE WE DO NOT CARRY THE BURDEN OF ALL THE COSTS. ALSO THE FIXED TERMINAL IS A NO GO, JUST REMEMBER IF IT IS A REQUIREMENT OF FITNESS WHEN SOMEONE VANDALISES A MACHINE YOU CANT WORK, UNTIL YOU HAVE IT REPAIRED I THINK THAT IS WRONG, JUST THINK OF ALL THE UBER DRIVERS TAKING SHORT JOURNEYS TO DAMAGE YOUR MACHINES? BE WARNED

Damian said...

We won't be bearing the cost, the customer will with the 20p on the FF. Just like in any other industry the costs are built into the goods and both cash and card users pay it. The HMRC issue is a red herring in my view. About time it changed but it has nothing to do with our issue. Last time I looked the HMRC was not in competition with anyone so they can, an do, do pretty much what they like.

I'm sad that it has had to be enforced but it was the only way to make it happen.

j a jenkins said...

i am suprised that you cant see that a 20p flag fall will not reimburse your cc fees. for instance if you do 2 £50 cc a day and no other fares that means you are down by £9.60 and that means you will have to do 48 more fares to break even, and what if the next 35 fares are cc you can never recoup your loss, please wake up, and if you think that the cc companies will leave the charge at 10% think again, because as soon as they realise they are not making the amount of profit they thought they were, then they will up the percentage just like uber is to there drivers. and if you think that that hmrc is a red herring why do they impose the surcharge.its very relevant to our issue, they are saying we cant pass on the surcharge but they can, this is the very same issue. just you wait if we get this wrong we will be dead in 2 years, no fixed terminals and payment before the start of a journey is a must. the fraud element is to much against us. JJ

Damian said...

Well let's look at the figures again J A Jenkins. If I did 2 X £50 cc journeys in a day I would in fact be charged £2.75. Take off the 40p from the FF leaves £2.35. If they were the only 2 fares I took that day then yes, I'd be paying £2.35 for the facility. It's not a lot of money really. Compare that to if I did 10 X £10 app jobs in a day.
Of course in the real world I wouldn't have only done those 2 jobs. As long as I did 12 non cc jobs I'd break even, on the daily tally. To put it even further into the real world we have to take into account a much longer period than just that one day. I mean you don't say you've had a rubbish week because Monday was quiet, or a poor year because you went on holiday for most of January. I did one of my busiest ever weeks on cc last week and although I didn't take an exact count of job numbers I'm pretty sure the 20p FF would have there or thereabouts covered my costs. Maybe this week I'll hardly take any cc's. Even if there is a small cost to me after adding it up I suspect it will be more than covered by the jobs I took because I had cc. Once we've all got cc they will go but be replaced by Billy's who avoid us because of the cc or who use the apps because that's how they wish to pay, they'll be able to stick their hand up again and we won't have to give away 10% +.

I understand some drivers have terminals that charge 10% and perhaps they are in a contract with the supplier. In that case my advice would be simply stop using it and buy a cheaper unit. Write the cost off, it's against tax anyway and all business's make errors along the way. if the current uncertainty re the tfl rules on cc makes spending £60 on an izettle or similar a bit unattractive, in that case soldier on until we know more although using your figures it would pay for itself in 2 weeks.
You are wrong about companies putting their charge up. If anything it will reduce more and more. I'm very happy with the 2.75 I pay but I know it could be cheaper and competition in the market will hopefully bring it down over time. Do you think Verizon's will be putting up their prices when it is so easy to go buy a much cheap, non contract PayPal or izettle? In fact I expect over the next 10 years or so we'll start to see free or nearly free cc transactions! Remember when we had to pay for business bank accounts and cash handling?

HMRC is a totally different set of circumstances and therefore a red herring. Your tax is worked out to the penny via your income minus allowances and then charged. HMRC must then report to the government with the collected funds. They cannot put cc 'into the price' in the same way we or tesco can and they cannot deliver money to the gov minus cc charges. That is why it is a totally different issue. The government could of course put tax up to cover the cost of people paying by cc so be careful what you wish for. Personally I'm happy with the current hmrc card payment arrangement. I believe debit card or chequebook or direct bank transfer is still free.

I do agree with you on the fixed terminal issue. A ridiculous idea. Pre payment however is already an option. I sometimes ask if it is a very long journey and the pax looks a bit iffy so there is no need for extra rules re cc on that.

All in all the cc is a positive thing for our trade. Of course we need to make sure the implementation is done right and do our best to stop tfl bending us over again but those paying 10% have the option to pay a lot less. Certainly the worst thing we could do is add the cc charge to the bill, it simply must be incorporated, like it is in 99% of places.