NSW government move to cut credit card surcharge brings taxi industry startups into the fold

The founders of transportation network startups ingogo and GoCatch have praised the New South Wales government’s move to drop the taxi credit card surcharge fee in the state.

On Thursday, the New South Wales government passed the Passenger Transport Act 2014, which halves the taxi surcharge on card payments from 10% to 5%. In addition, the act brings taxi booking apps into the regulatory framework for the first time.

Minister for Transport Gladys Berejiklian says the move ensures customers have more booking options while also prioritising customer safety.

“Under the updated legislation, customers will be able to choose from a range of booking methods, including apps that connect them directly with a driver and allow them to track their taxi service on their smartphone,” she says.

“We all know apps can be a really useful tool for our customers when planning and booking their trip so we’ve updated the law to encourage more apps to be developed and used.

“All apps will now have to meet a full range of customer service, privacy and safety standards so customer safety remains number one.”

Ingogo currently offers a 5% credit card surcharge for those who make payments through its mobile booking app. Ingogo founder Hamish Petrie says the startup will keep credit card surcharges for those making payments using its mobile payments platform in taxis at 10% until the changes are introduced later in the year, when it will reduce that surcharge to 5% in line with the legislation. The commission drivers receive will also drop from between 5-6% to between 2-3%.

“Thanks to our lean and efficient business model we’re happily able to cut the fees,” Petrie says.

“We will need to reduce our driver commission to 2-3%. However, we expect to be the only player offering any sort of commission to drivers.

“Ingogo welcomes the legislative changes in New South Wales to reduce unreasonable and unnecessary fees for passengers and drivers.”

GoCatch co-founder Ned Moorfield says while the startup doesn’t offer commission to drivers they are better off using its service.

“We haven’t paid commission to drivers for quite a while now because commissions are a rip-off. These changes show how much fat there is to be cut from the taxi industry,” he says.

“We absolutely welcome the changes. Bringing us into the regulatory fold is a positive thing and we’re more than happy to be meeting the requirements.

“We’re higher up the value chain for drivers because we’re originating work for drivers.”

Moorfield says drivers on the GoCatch platform picking up an extra four to five jobs per day is more valuable than any commission the startup could offer. He says offering a commission is effectively a way to buy market share.

Image credit: Flickr/rubygoes

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