The Rich Miser

Beware of Taxi Credit Card Surcharges, Especially in Vegas

So I was in Sin City (Las Vegas) last weekend for a birthday bash, and wound up throwing away some cash in what most would agree amounts to a taxicab scam. Here’s my mistake story, so those dollars stay in your pockets, where they belong.

Why Take Cabs?

By now, the eternal conflict between Uber, Lyft and other ride-sharing services and taxis is common knowledge. I mainly use Uber and Lyft (and, in fact, use them exclusively in my home city of Miami), but tend to use taxis in places where they’re easy to hail. What I mean is that, in cities like New York and Las Vegas (at least on the strip), I find it easier to take a nearby cab than to go through the motions of calling an Uber, and waiting for and identifying the driver.

Las Vegas Taxis and Credit Cards

Even in the case of taxis, I prefer to pay by credit card (rather than cash). It’s an electronic transaction, I get rewards points, don’t have to deal with change, and have an exact record of what I spent. Plus, nowadays, many cities have laws in place forcing taxis to accept credit cards, so it’s not as big of an issue as it used to be, and you don’t get the ol’ “my credit card reader is broken” excuse as often as in days past.

With this in mind, I started paying for my Vegas cabs with credit cards. However, I soon started noticing that, for every single trip, I was being hit with a $3.00 fee. As I remember it, when each ride ended (and most rides were like $12, just up and down the strip), a screen inside the cab would show a fare breakdown including the base fare, but then tacking on a $3 “voucher fee”. In total, a $12 ride would wind up costing like $20, with the $3 added, plus tax and tip.

By like the fourth time this happened, I asked the driver about it, and found out that it only applies if you pay with credit cards. From then on, I started paying with cash.

The Fee Is A Legal Swindle

In my book, this is a swindle and a scam. I did some research, and that seems to be the general consensus, even if it’s legal.

Per Forbes, it looks like this has been going on for years (since at least 2013), and is rather brazenly “justified” because “$0.50 of the $3 goes to the taxicab company. ‘The remaining $2.50 goes to [the credit card processing company] to facilitate the transactions and maintain the equipment,’ such as the electronic credit card processing devices in the cars, and to pay for bank processing fees”*.

I think this is ridiculous. They are essentially admitting that not only does the cab company profit $.50 from each transaction, but the customer is also paying for the credit card company “swipe fee”, plus the payment equipment costs. I can’t think of any other business that is in such a privileged position as to make the customer pay extra for not just the card company’s processing fee, but also the credit card machine.

That’s like a store nailing you with a surcharge for the cost of the cash register, instead of taking it as a normal expense of doing business, like everyone else. I also think that it’s misleading (and should be made illegal) to call it a “voucher fee” instead of what it really is.

Only In Vegas

Luckily, and per the Forbes article, it seems that this is mostly limited to Vegas, at least in the US (apparently, taxis in Canada, Australia, and New Zealand also charge extra to credit card users, but less than Vegas cabs).

A Ray of Hope

It looks like there are efforts underway to reduce or eliminate the Vegas fee, as reported last November by the Las Vegas Review-Journal. Not only is it perceived as unfair to customers, but many cab drivers also seem to hate it, because some riders think it’s a tip and therefore do not add tip, which may harm the drivers and benefit the cab company. Put another way, the cab-owning company gets the fee, but the driver loses the tip.

Despite these complaints, the fee was still in place as of last weekend (July 28-29, 2017). Let’s hope it’s eliminated soon.

Bottom Line

If taking cabs in Vegas, pay cash.

*As told to Forbes by Nevada Taxicab Authority Administrator Charles Harvey

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2 thoughts on “Beware of Taxi Credit Card Surcharges, Especially in Vegas

  1. Real Rich Sam

    Taxis in Las Vegas have employee drivers so the administration of the credit card payments requires additional resources. Taxi companies in other cities have contractor drivers, you pay the driver and the driver keeps all the money, usually the credit card transaction goes directly into the drivers checking account. In Vegas you are actually paying the company, the company has to reconcile all those transactions and pay the drivers every two weeks.

    In addition, each taxi has a credit card terminal on a mobil data plan. Think of a typical retail business that has a terminal at each register processing thousands of dollars in transactions daily. Taxis are processing only hundreds of dollars per terminal per day, but need data plans and a maintenance departmemt dedicated to keeping system operating. If a terminal goes down, the taxi has to go out of service.

    1. The Rich Miser Post author

      Hi Sam, and thanks for reading.

      I still think that, from the consumer’s point of view, the charge is outrageous. It seems to me that, regardless of the back-end cost, it would be a tax-deductible operational expense that practically every other business would absorb.

      I do appreciate the extra information, which is always helpful.

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