City Hall update: Cabs forced to take credit cards

Share this:
January 30, 2012
By: Nick Halter
Nick Halter
Taxicab drivers in Minneapolis will be forced to accept credit cards, but they won’t have any way to pass costly fees onto their customers.

On an 11–2 vote, the City Council voted that by June 1 every cab operating in Minneapolis must have a credit card machine installed and its driver cannot turn down passengers wishing to use a credit card.

Council Member Gary Schiff authored the ordinance, saying it puts Minneapolis in line with other big cities and serves both residents and visitors who might find themselves in a pinch when looking for transportation but have no cash.

But taxicab drivers say they’re being forced into public service at their own cost. The city regulates how much they can charge for a fare using a taxicab cost index adopted in 2009. That index uses a number of cost factors like fuel, maintenance cost of living licensing fees.

The index does not, however, include the fees that credit card companies charge to cab companies. Yemane Mebrahtu, president of the Minneapolis Taxicab Drivers and Owners Association, said cab companies pass those fees onto drivers.

Mebrahtu said fees range from 5 percent to 10 percent of a fare. So a $25 fare might cost the driver an extra $1.25 to $2.25.

“[The city] runs our business without knowing our expenses,” Mebrahtu said. “You have the responsibility to serve to the people even if it’s at your own expense.”

On Jan. 13, Hamza Gazi had been waiting for potential customers for two hours outside the Double Tree Hotel downtown. Looking through a stack of credit card receipts, he said his cab company charges him 7 percent for credit card transactions.

Making it worse, Gazi said, is that the city has licensed more cab drivers recently, making it tough not only to find passengers, but also to find a legal zone to park and wait for them.

That caused Gazi, 42, of South Minneapolis, to be cited for 25 traffic tickets last year, he said.

Gazi has a commercial driver’s license. For many years he worked as a truck driver earning decent wages, but was laid off when the economy tanked three years ago. That forced him to get a taxicab job, but with tight fare limits and now the credit card fees, he’s struggling to support his wife and daughter.

Gazi, who was born in Somalia, has applied for truck driving jobs recently, but because of his driving citations he has been turned down. He said he’s considered quitting and instead applying for welfare.

“But I don’t want to do that,” he said. “I’m a hard worker. I want to work.”

Speaking in support of the ordinance change, Council Member Lisa Goodman (Ward 7) said it’s a safety issue. By taking credit cards, intoxicated people without cash wouldn’t be stranded or encouraged to drive home.

Schiff said studies show that credit card users generally leave larger tips.

Cam Gordon (Ward 2) and Meg Tuthill (Ward 10) voted against the ordinance. Tuthill, a former small business owner, said business owners have little recourse but to absorb fees passed on by big credit card companies.

“I’m not happy telling someone they have to do this when there is no flexibility shown by credit card companies,” she said.

Reach Nick Halter at nhalter@mnpubs.com.