Travel Maze: In Vegas, the Taxi Game is Rigged Against Credit Card Users

Credit cards will take a traveler a long way in our cashless society -- as long as that traveler isn't trying to take a cab in Las Vegas.

Like laundromats and vending machines, taxis are among the last holdouts in U.S. society's transition to plastic, a lesson I learned the hard way in one of the tourism capitals of the world.

Several months ago, I waited for more than half an hour in windy, evening weather at the Las Vegas airport for a taxi that took credit cards. Dozens of cash-only taxis were available, but I was low on folding money, and didn't want to pay an ATM surcharge. As a business traveler, I also wanted an official credit card receipt for my records, not one of those blank, fill-in-the-amount cards given by drivers.

Ultimately, the credit card taxi, as they call it in Las Vegas, did come. Ironically, when we got to the Trump International Hotel, the cab's credit card machine, didn't work -- or so the cabby told me. So, I had to go into the hotel to use an ATM, and pay the multidollar surcharge.

To add insult to injury, I later found out from Kelly Kuzik, management analyst at the Nevada Taxicab Authority, that my $25 taxi fare had been about $10 too high. Kuzik explained to me that a too-often used trick among Las Vegas cabbies is to take the long way from the airport to the Las Vegas strip, through a tunnel and on the interstate.

He also said my difficulty in finding a cab that would take credit cards wasn't surprising: Only about 10% of taxicabs in Las Vegas accept plastic.

In New York, Plastic Means Bigger Tips

More and more U.S cities are mandating that taxicabs take credit cards. In 2004, New York City became one of the first municipalities to require that taxis take credit cards, but the order by the Taxi & Limousine Commission still took four years to fully implement.

New York City cabbies were given a rate increase as part of the approval deal to help them pay for the equipment to process credit cards, which cost around $1,000 a cab. Taxis also pay a processing fee, around 5% of their fares. Nonetheless, New York cabbies were so upset over the credit card edict that they declared a two-day strike in 2007.

Gradually, however, their resistance to credit cards disappeared, a process helped by statistics that show those paying with plastic in New York City tip around 22%, compared to 10% for those paying cash. New York City's program has also become a model for other cities like Boston that have successfully made the transition from all-cash taxicabs.

The technology mandated by New York City allows passengers to swipe their credit cards in a card reader in the back of the cab. The drivers never touch the cards, removing questions about credit card security.

Things have not gone as smoothly in other cities mandating that taxis accept credit cards. In cities such as Chicago and Philadelphia, it has apparently become routine for cabbies to claim their credit machines are broken. A 2008 news reports detail a Philadelphia cab driver assaulting his passenger in a dispute over the taking of credit cards.

Getting Taken for a Ride With $3 Credit Card Surcharge

Will Las Vegas join the ranks of cities mandating that cabs accept credit cards anytime soon?

The Nevada Taxicab Authority's Kuzik predicts that Las Vegas taxis will be required to take credit cards by the end of the year. He said the authority has scheduled a workshop on the issue for late June.

But using a credit card in a Las Vegas cab may also mean a $3 surcharge. Last weekend, I was back in Las Vegas, and my $15 fare became $18 when I took a taxi from the airport to the Paris Hotel.

It turns out that those taxi cab companies in Las Vegas that do accept credit cards all have opted to go with a New York vendor, TaxiPass. The company installs its credit card machines in taxis for free and processes the credit card purchase. In exchange, TaxiPass charges a $3 convenience fee, which is added to the fare the customer pays.

In April, the Nevada Taxicab Authority approved by a 4-1 vote letting cab companies bypass TaxiPass, accept credit cards if they choose, and impose the same $3 fee that TaxiPass does.

But Kuzik says the April decision is only a temporary regulation until the authority decides whether the 14 taxicab companies in Las Vegas, run by nine ownership groups, should all be required to take credit cards.

The question of whether taxicab companies should eat the cost of accepting credit cards as a cost of doing business, should also be decided, says Kuzik.

In his personal opinion, he says he views the $3 surcharge as a little steep, considering that the average taxi fare in Las Vegas is $13.50.

Cab Companies Carry Political Clout

Last year, the nine taxicab ownership groups in Las Vegas took in $334 million in revenue. Kuzik says individual company financial records are confidential, but that all nine companies were profitable in 2009.

But at the April hearing, the taxicab companies argued that customers should bear the cost entirely of the credit card transactions, noting that most passengers are tourists anyhow. The Authority agreed in its vote enacting the interim regulation that allowed the $3 surcharge.

What gives?

It's hard to know exactly, but its interesting to note that the largest of the taxicab ownership groups, Frias Management, is controlled by former Nevada State Sen. Mark James.

Frias owns 1,000 of the almost 3,000 cabs in Las Vegas, and as it turns out, James is also a key supporter of Nevada Gov. Jim Gibbons, who just happens to appoint the members of the Nevada Taxicab Authority.

James and other officials of Frias Management did not return phone calls. Kuzik said Nevada Taxicab Authority members would not be at liberty to talk about the credit card issue since they will soon be making a decision on the matter.

It remains to be seen whether Las Vegas will be joining the 21st century. For now, the only sure bet in Las Vegas is to carry cash when hailing a cab.