COMMITTEE: EXECUTIVE REF NO: E/10/105 DATE: 22 MARCH 2011 HACKNEY CARRIAGE CHIP AND PIN MACHINE SURCHARGE PORTFOLIO HOLDER: COUNCILLOR TANYA DE HOEDT

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1 6 COMMITTEE: EXECUTIVE REF NO: E/10/105 DATE: 22 MARCH 2011 SUBJECT: HACKNEY CARRIAGE CHIP AND PIN MACHINE SURCHARGE PORTFOLIO HOLDER: COUNCILLOR TANYA DE HOEDT DIRECTOR: LAURENCE COLLINS Short description of report content and the decision requested: This report deals with requests from two Private Hire companies to permit the use of chip and pin machines which charge a surcharge on top of the metered fare should the customer choose to pay the fare using a credit/debit card. Executive is asked to approve an amendment to the Hackney Carriage Table of Fares to incorporate a surcharge for introduction on 1 May List of Appendices included in this report: 1. Appendix A Table of Fares relating to application. This report has been prepared by Debbie Devine, Transport Officer Hackney Carriage and Private Hire, Tel: in conjunction with John Jacobs. This report was prepared after consultation with: Internal consultees Laurence Collins, Director Peter Sparkes Legal Services External consultees Hawk Express Cabs Ltd All The Fours Cabs Ltd The following policies form a context to this report: (all relevant policies must also be referred to in the body of the report) Transforming Ipswich

2 LIST OF BACKGROUND PAPERS AS REQUIRED BY LAW (papers relied on to write the report but which are not published and do not contain exempt information) OTHER HELPFUL PAPERS (papers which the report author considers might be helpful this might include published material) 1. Minutes of the meeting of Executive Committee on 12 October

3 1. Introduction 1.1 A request has been received from two Private Hire companies, which also run Hackney Carriage Vehicles, to be able to have chip and pin card payment machines in their vehicles. As the customer would be required to pay a surcharge to use this facility, it would be necessary to include this surcharge on the Table of Fares approved by the Committee for Hackney Carriages. 1.2 The following Appendix is attached to this report: Appendix A Table of Fares showing the amendment to include a surcharge for using chip and pin card payment machines. 2. Background 2.1 Section 66 of the Local Government (Miscellaneous Provisions) Act 1976 prohibits the demand of a fare greater than that shown on the taximeter for hirings, unless it is included in the permitted additional charges (for example the soiling charge). Therefore, a surcharge on a fare paid by card on a chip and pin machine would result in the customer paying more than the fare shown on the taximeter. 2.2 Private Hire vehicles are not required to have taximeters, furthermore, Private Hire Companies can set their own Table of Fares. Therefore, any passenger taking a journey in a Private Hire Vehicle, which is not fitted with a taximeter, may be offered the option of paying the fare by credit/debit card, including a surcharge. 2.3 Two Private Hire companies have indicated their wish to introduce card payment machines in all of their vehicles, and as they operate Hackney Carriage Vehicles in addition to Private Hire Vehicles, have requested that the Council considers amending the Table of Fares to enable a surcharge to be levied on card payments by chip and pin machine in Hackney Carriages. Council Officers have become aware that some Hackney Carriage Vehicles in Ipswich already have card payment machines, which charge a surcharge, however, to date, no formal approval has been given by the Council for such use. 2.4 As explained above, chip and pin machines can be used in Private Hire Vehicles, one of the above Private Hire Companies has already introduced their use in its Private Hire Vehicles. It would be anomalous for one sector of the trade, Private Hire, to be able to use these machines for payment and not the other. In addition, the use of chip and pin machines is a widely used method of payment in today s society and many people find it more convenient than carrying cash. The customer would always have the option as to whether to use a credit or debit card and pay a surcharge or pay using cash. 2

4 2.5 There are a number of different companies offering chip and pin card payment machines to the trade and they appear to operate in a similar manner in that the machine itself is rented from the company for about 20 per month, however, the level of surcharge does vary. One company levies a straight 10% surcharge, whilst another levies a surcharge of 7.5% or 1.00 whichever is the greater. The surcharge is levied by the Card Machine company to pay for the administration of taking the payment and then arranging for the driver to be credited with the fare. 2.6 All payments made by credit/debit cards attract a surcharge from the bank, however, the consumer is rarely aware of this surcharge as it is generally absorbed by the service provider. However, in some instances the surcharge is passed on to the customer and one example of this is the Council s own system. If a customer pays for a service by credit card a 1.5% surcharge is levied, as that is the charge by the bank for providing that service. 2.7 Hackney Carriage drivers could offer credit/debit card payment facilities and absorb the surcharge costs. However, drivers would have to pay the monthly rental charge for the actual machine of approximately 20 per month and if the surcharge was also absorbed it would result in a noticeable reduction in the driver s income, which in the current economic climate is unlikely to be an attractive option. 2.8 One example of the fare and surcharge options that would be payable on a journey within the Borough Boundary is from the Railway Station to Heath Road Hospital. At a busy time of day on tariff 1 (day-time) the standard fare would be about If the customer paid by card with a 10% surcharge, the additional amount payable would be 0.76p, making the total payable If the surcharge was 7.5% or 1.00, whichever is greater, the surcharge would be 1.00, making the total payable The two Private Hire Companies have opted for different systems and there would be a need to amend the Table of Fares to allow for the variations. The fare chart produced by Transport for London states Some taxis accept credit or debit cards and there is a maximum charge of up to 1.00 or 12.5% of the metered fare It is suggested that wording of Some taxis accept credit or debit cards and there is a maximum charge of up to 1.00 or 10% of the metered fare on Ipswich Borough Council s Table of Fares would meet the requirements of both Private Hire Companies which have approached the Council, and the individual Hackney Carriage proprietors who already have chip and pin machines. It is anticipated that any other driver wishing to obtain a machine would be able to obtain one within these limits There are an increasing number of reports in Taxi and Private Hire Monthly of drivers being attacked and robbed of their takings, although 3

5 there are very few incidents of this nature in Ipswich at present, and the introduction of chip and pin card payment machines would increase driver safety, as driver s would carry less cash and therefore be less of a target for robbery. In addition, customers would benefit as they would have greater flexibility in payment of fares. At present, with a cash only option, some customers have to ask to be taken to a cash point to withdraw cash before being able to pay, which costs them more due to a detour in their route and waiting time whilst at the cash point. It is possible that the surcharge for a card payment would be cheaper than this alternative. 3. Relevant Policies 3.1 The Council s main goal under the Travel in Ipswich section of the Corporate Plan is to develop and encourage the use of an integrated and effective transport system, which encourages the use of public transport, walking and cycling and reduces the overall impact of travel on the environment. 3.2 The hackney carriage and private hire trades are an important and essential component of the local public transport system and are the only parts that are operational 24 hours each and every day of the year. 3.3 Ensuring that hackney carriage policies are regularly reviewed and adjusted to strike a reasonable balance between the needs of drivers and passengers is an important function. 4. Options Considered / Under Consideration 4.1 Option 1 Do not agree to amend the Table of Fares to include provision for a surcharge to be charged on credit/debit card payments. 4.2 If the Committee is minded not to agree to permit a surcharge being charged on credit/debit card payments for Hackney Carriage fares, drivers could still have a card payment machine, however it is highly unlikely that Hackney Carriage drivers will absorb the costs of the surcharges, therefore customers would continue to only pay taxi fares by cash. 4.2 Hackney Carriage drivers who currently have a card payment machine and charge a surcharge would be required to cease using them, or to absorb the surcharges. 4.3 One Private Hire company has already installed card payment machines into its Private Hire vehicles. There are a number of Private Hire companies in Ipswich and it is likely that these other Private Hire companies will introduce credit/debit card payment facilities including a 4

6 surcharge. This would lead to anomalies between the two trades and could lead to confusion by the public. 4.4 Option 2 Agree to amend the Table of Fares to include provision for a surcharge to be charged on credit/debit card payments. 4.5 If the Committee is minded to agree to permit a surcharge being charged on credit/debit card payments for Hackney Carriage fares, it is highly likely that the two Private Hire Companies will install card payment machines in all of their vehicles. It would mean that the existing Hackney Carriage drivers who have card payment machines would be able to continue to use them. It would also possibly encourage other drivers to offer this method of payment. 5. Consultations 5.1 Consultations have taken place with both Hawk Express Cabs Ltd and All The Fours Cabs Ltd, the two Private Hire Companies who have expressed a wish to be able to offer this payment facility. Discussions have also taken place with the independent Hackney Carriage Drivers who offer this method of payment. All advocate the introduction of card payment facilities from a driver safety aspect and a flexible payment method for the customer. 5.2 It will be necessary to advertise any amendments to the Table of Fares, and consider any public objections that may be received. 6. Risk Management Risk Description The surcharge on Hackney carriage fares paid by chip and pin machine set too high. Consequenc e of risk Passengers will opt to pay by cash. Drivers will be carrying more cash in their vehicles. Risk Controls Set a maximum surcharge that may be levied and ensure that customers are given a choice of payment method. Probability of risk occurring taking account of controls (scale A-F) A very likely F almost impossible Impact of risk, if it occurred taking account of actions (scale 1 catastrophic; 4 negligible) Actions to mitigate risk E 3 Undertakes an annual review together with regular performance monitoring. 5

7 7. Environmental Impact Assessment 7.1 The taxi (and private hire) trades are the only elements of the public transport network that are available 24 hours a day, 365 days a year. As such, maintaining a viable hackney carriage (and private hire) trade that is able to provide a good quality and reliable service to the travelling public will be key in minimising unnecessary use of the private car. 8. Equalities and Diversity Implications 8.1 An EQIA screening assessment has been undertaken to assess whether there are any detrimental equality and diversity implications arising out of this report. The assessment has not identified any detrimental equalities and diversity impacts. 9. Financial Considerations 9.1 There are no direct financial implications for the Council arising out of the contents of this report. 10. Legal Considerations 10.1 Section 65 of the Local Government (Miscellaneous Provisions) Act 1976 prescribes a requirement for Local Authorities to publish a notice setting out the Table of Fares or the variation thereof. This notice must allow fourteen days, from the date of publication, for objections to be submitted. 11. Performance Monitoring 11.1 Subject to approval of this amendment to the Table of Fares by Executive it would be the intention on this occasion to advertise the revised Table of Fares and introduce it with effect from 1 May 2011, subject to consideration of any objections. 12. Conclusions 12.1 There is no doubt that society is becoming more cashless and the ability to pay by chip and pin is a widely accepted principle. It is important for the Hackney Carriage and Private Hire trades to be able to keep pace with society and to be able to offer chip and pin card payments as a method of paying for fares. 6

8 13. Recommendations 13.1 that the revised Table of Fares attached at Appendix A be approved; Reason: to provide greater flexibility to the public in payment hackney carriage fares and to enhance driver safety that the Integrated Transport and Parking Manager be authorised to advertise the approved revised Table of Fares in accordance with Section 65(2) of the Local Government (Miscellaneous Provisions) Act 1976 to permit its introduction on 1 May Reason: to comply with statutory requirements associated with amending hackney carriage fare levels 7