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

Figure 12.1 Trends in the use of electronic payment in taxis, Cabcharge results
Figure 12.1 Trends in the use of electronic payment in taxis, Cabcharge results
Turnover by category ($m)
422
193
459
198
425
169
400
149
423
137
337
408
450
456
473
FY07 FY08 FY09 FY10 FY11
Bank Issued Third Party CAB a/cs
Source: Cabcharge Australia Limited, Results Presentation, Year Ended 30 June 2011, ASX website
www.asx.com.au/asxpdf/20110825/pdf/420m67s6sllnnv.pdf
As in other sectors, non-cash payment instruments are a
popular payment method because of their convenience
and security. This benefit extends not just to taxi users, but
also to taxi operators and drivers, as reducing cash held
in the taxi reduces the threat of robbery. Taxi-specific noncash
payment instruments (such as the Cabcharge charge
card) provide additional benefits to consumers, notably
a line of credit, detailed records of travel expenditure
and a reduced risk of fraud or misuse. This makes them
particularly popular for corporate and government use.
Based on the same operator’s data referred to above, the
inquiry estimates that up to 50 per cent of weekday taxi
fares (when the share of corporate and government taxi
use is highest) are paid electronically.
With approximately 32-35 million trips taken in
Victoria each year, at the average Melbourne fare of
$23 (which is typically a lower fare than the average
fare of trips paid for electronically) – and based on
40 per cent of all fares being paid electronically –
the inquiry estimates that the service fee generates
at least $30 million in revenue each year.
12.2.1. History of electronic payments
in taxis
The 10 per cent service fee is historically based. The
inquiry understands that, prior to 1976, all major
Melbourne taxi companies offered and provided a simple
docket-based charge account facility to corporate and
government customers, charging a 10 per cent service
fee for use of the facility. This fee was approved or, at
least, not opposed by the relevant regulatory authorities.
Cabcharge’s launch in 1976 was based on the
assessment that there was a business opportunity to
provide to the corporate/government taxi market the
ability to travel to any capital city in Australia and chargeup
taxi travel. Having a facility that extended across the
country eliminated the need for people to carry cash for
taxi travel (and then claim these amounts later), as well
as delivering some degree of account consolidation and
protection from fraud.
Cabcharge began processing third-party cards (Amex,
Diners and MotorPass) in 1982. This extended to
bank-issued cards (Visa, Mastercard and Bankcard) in
the late 1990s after Cabcharge launched its Fareway
mobile EFTPOS system. Cabcharge called for tenders
from all the major banks to become the acquiring
bank for all Cabcharge bank-issue transactions. The
National Australia Bank was the successful tenderer and
contributed $10 million to acquire (and own) the EFTPOS
terminals. In 2005/06, these terminals were replaced by
terminals that are owned by Cabcharge.
Cabcharge extended the 10 per cent service fee for
charge account facilities to all electronic payment
transactions made using the Cabcharge terminal.
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