A proposal to add a 50-cent surcharge to credit card payments for cab rides in Chicago advanced out of the Council’s Transportation Committee yesterday. Just three of the seventeen aldermen on the committee, including Chairman and sponsor Ald. Anthony Beale (9), were still present when the ordinance was finally voted on at the end of the two hour meeting.
Members Present: Chairman Anthony Beale (9), Pat Dowell (3) Raymond Lopez (11), Jason Ervin (28), Chris Taliaferro (29), Gilbert Villegas (36), Michele Smith (43). Non members: Walter Burnett, Jr. (27), John Arena (45).
The 50-cent fee is aimed at easing the burden on taxi companies that have to pay a 5% service fee to cash credit card payments. The money will go to the cab companies, not the drivers. This point was clarified in the substitute ordinance that was adopted at yesterday’s meeting, which added the following provision: “The convenience fee shall be used only to cover any portion of the processing fee and related costs that a licensee incurs to accept non-cash payments for taxi services through credit card processing equipment approved by the department.”
When the City Council and the Department of Business Affairs and Consumer Protection approved new rules for the industry in 2015, it set a timeline to decrease the driver’s portion of the service fee to 4% in January 2016 and 3% in July 2016, as a way to lessen the burden on drivers. But the medallion holders who lease the cars out argue they can’t afford to pick up the extra cost either.
“The affiliations [cab companies] are not able to absorb a loss of the kinds we’re talking about when processing credit card fees, because of the proliferation of ride-share cars on the market, and… the lack of taxi drivers. The taxi industry is on the verge of collapse,” said Mara Georges, former City of Chicago Corporation Counsel who now represents the Illinois Transportation Trade Association (ITTA), a group comprised of taxicab drivers and medallion owners.
Chicago taxi drivers process an average of 13 million taxi fares a year, according to Georges. When you take into account that each trip costs an average of $25, the 3% service fee that will soon take effect adds up to a lost of over $6.5 million annually, she added. “So here we’ve got a partial solution to a problem that is costing the taxi industry millions of dollars annually. This is not a fix for the collapse of the taxi industry. This is a temporary band aid on a problem that is going to cause the taxi industry’s collapse. Without further action by this council to either regulate ride shares or to ease the regulations on taxi cabs, to level the playing field… the taxi industry will no longer exist in the city of Chicago.”
Ald. Raymond Lopez (15) and Ald. Michele Smith (43) joined Ald. Beale in approving the ordinance. Ald. John Arena (45), who isn’t a member on the committee but a strong proponent of creating more parity between taxi drivers and their ride-share competitors, was also present.
“We need to come up with a comprehensive solution, and we need to do it sooner rather than later. Continuing to put in front, to me personally, these nickel and dime ordinances to just chip away at some minor problems is not the approach I would like to see the administration take,” Ald. Arena opined.
He and Georges have both argued the only way to create true parity between the two competing industries is to require that ride-sharing drivers get the chauffeur licenses that taxi drivers are required to get.
Much of the public testimony at yesterday’s committee meeting consisted of recycled testimony heard at a Licence Committee meeting the day before, when cab drivers and taxi industry officials warned aldermen that they can no longer make a decent living due to the flood of Uber and Lyft drivers on city streets.