Part D – Understanding and improving industry performance (PDF ...

Electronic payment systems
Taxi licence conditions require that all vehicles in Victoria
be fitted with an electronic payment system capable of
processing the government taxi subsidy program known
as the Multi Purpose Taxi Program (MPTP), with a small
number of exceptions in the country. The only system
able to process the cards associated with this program
is the Cabcharge owned system. As a consequence,
all Victorian taxis must be fitted with a Cabcharge EFT
terminal. Electronic Payments received through this system
(Cabcharge charge card or credit and debit cards) are
disbursed to the operator via the NSP. 22
Vehicle fit-out and repair
Both of the dominant NSPs in Melbourne provide
vehicle fit-out workshops to their affiliated operators that
install and repair in-cab equipment such as mobile data
terminals, EFT payment systems, meters and cameras.
These workshops have exclusivity for installation and
maintenance of some equipment, such as the mobile
data terminal, GPS system and EFT equipment. The
inquiry understands that some or all of these services
may be considered necessary and form a core part of the
provision of services by an NSP.
Taxi driver training
As discussed in chapter 13, people seeking to be
accredited as a taxi driver in Melbourne must first
complete a training package with an approved registered
training organisation (RTO). Currently, four RTOs offer
this training: one is owned by a large taxi operator,
one is independent and two are linked to NSPs. The
inquiry understands that the NSP-linked RTOs have the
dominant market share of taxi driver training. 23
NSPs also offer network access training and remedial
training. This training may be undertaken on a voluntary
basis or be imposed on the driver under the NSP rules
(such as following a complaint against a driver).
Finance and insurance
Finance for equipment or licences and business
insurance for taxi operators is known to be offered by
the Cabcharge-owned NSPs. These services are also
offered to taxi industry participants by companies outside
of the taxi industry. The inquiry understands that these
services may be bundled and that taxi operators can pay
for them by having regular payments deducted from their
electronic revenue disbursements.
Taxi licence brokering
Designated taxi licence traders (known as brokers)
provide a ‘matching service’ between the buyers and
sellers, and assignors and assignees, of taxi licences. As
discussed in chapter 10, a larger number of licences are
transferred or assigned through brokers affiliated with the
major primary NSPs.
Vertical integration by the primary NSPs can help promote
efficiency in the industry as the NSPs are well placed to
achieve economies by undertaking these extra activities.
There is a concern, however, that vertical integration
could also serve to entrench market power and restrict
competition. To avoid this, it is important that any
unwarranted restrictions between NSPs, at the horizontal
level, be removed. In particular, barriers to entry and to the
establishment of new NSPs need to be minimised.
11.2.3. Secondary networks and trunk
radio groups
In addition to the mandatory affiliation with a primary
NSP, taxi operators may belong to a secondary
network. Secondary networks vary in size and
complexity and are commonly characterised as
a collection of experienced drivers and operators
who aim to deliver a higher quality service.
A driver or operator may be a ‘member’ of a
secondary network and can market their services
directly to customers. Network members generally
communicate with each other through a trunk radio
installed in the taxi vehicle and use the radio to share
work to meet demand when they are unable to
service the customer directly themselves. Secondary
networks are a more recent service offering and
appear to be gaining popularity with customers,
particularly in the corporate and disability sectors.
Historically, operators and drivers were unable to offer
a service directly to customers before the advent of
mobile phone and pager technology. In the early 1990s,
advances in telecommunications enabled this physical
constraint to be overcome, making it possible for a
customer to contact their driver of choice at any time.
The formation of secondary networks has enabled these
drivers to pass jobs on to other trusted drivers to ensure
service continuity and customer satisfaction during busy
times or when they are off duty.
22 Taxi payment systems are discussed further in chapter 12
23 See section 13.2.1 for further discussion on driver training and RTOs
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