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Alexander Peschkoff


Alexander Peschkoff - TEDIPAY

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

VeriFone charges 10 per cent

04 October 2012  |  4819 views  |  4

When it comes to payments, London taxi is an interesting microcosm. A few years ago, cash was king and cabbies didn't look elsewhere - it is rumoured that many black cab drivers were filing their tax returns on the basis of earning £50... per week.

Things have since moved on. "Mobile" is a familiar part of taxi business now, whether it's using an app to book a ride or taking payments on the go. When it comes to the latter, "mobile" mostly refers to "POS on wheels".

VeriFone did a good marketing job there, signing up taxi drivers with their "everything for free" offer (whilst aiming to "enhance the passenger experience"). When something is too good to be true, it usually is - as that poker saying goes, if you can't see the sucker, it's you.

Taxi drivers indeed get VeriFone's shebang for free (if the driver wants an LCD display for screening annoying ads, that's £250 extra). The downside? The driver has to sign a five-year agreement which can be terminated earlier by paying £200 de-installation fee (which could be waived in some cases).

VeriFone's kit takes up valuable luggage and cabin space, creating some inconvenience for the driver and the passengers. A bank can reverse charges up to 540 days (!) after the transaction has taken place (that time bomb has little to do with VeriFone I guess, but can/should still be addressed to protect the driver).

Importantly, the driver keeps the fare shown on a meter.

So, who is the sucker? You guessed it right: it's YOU!

VeriFone system adds 10% surcharge to the metered fare. For "cardholder present" (!) transactions. We all balk at airline surcharges, but compared to VeriFone's taxi deal even Ryanair starts looking like Mother Teresa.

Some of us may give a 10% tip to the taxi driver anyway. Giving such a tip to VeriFone is another matter altogether - nobody likes being taken for a ride when paying for the ride.

Is there a better way, both for the driver and the consumers? You bet!


TagsMobile & onlinePayments

Comments: (4)

Matt Scott
Matt Scott - RenovITe Technologies Inc - London | 05 October, 2012, 11:36

Either consumers will stop tipping cabbies (as they are paying their 10% to verifone) or consumers will simply not use it - either way it will end up getting kicked into touch just like all the other earlier "Taxi Solution" offerings until someone can present a reasonably priced alternative to using hard cash.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 05 October, 2012, 14:01

A couple of taxi companies in a couple of large metros in India are equipped with MobilePOS and accept credit cards. The passenger pays what's displayed on the meter. The cabbie suffers a 2% processing fee and a 2 day delay in receipt of funds since the payment is routed via the taxi company. Despite such comparatively attractive figures, every cabbie desperately tries to wriggle out of accepting credit cards. I almost got booted out by one of them when I tried explaining the high "hidden cost" of cash acceptance. Which is why I have a good laugh whenever I hear gurus and pundits going on and on about how mobile payments will empower plumbers, handymen and other "micro-merchants" to accept credit cards. Which is also why I'm not in the least surprised by this FED report according to which checks are the only growing segment of P2P payments in the USA.

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A Finextra member
A Finextra member | 09 October, 2012, 12:51

What is a taxi ride from Heathrow to London these days?  Too much to pay cash I bet.  A lot of people pay with a credit card specifically BECAUSE they have a ready excuse not to tip with any cash, and they have a handy expense record with their credit card statement.

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A Finextra member
A Finextra member | 09 October, 2012, 13:44

I guess that is what the Heathrow Express is designed to compete with (it offers a much more competative and speedier option that a cab - even one levying an extra 10% to accept cards for payment)...

Without a compelling business case to cabbies or cardholders this will not get traction...

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