Taxi drivers to face ‘significant loss’ of earnings if customers ditch cash

Taxi drivers will see a “significant loss” of earnings due to fewer tips if more customers ditch cash for cards, according to experts at ECD Technologies.

According to the data, only one in five tips are made using digital payments compared to physical money.

It comes after the group conducted a study of 279 journeys between May 17 and June 24, 2022.

The findings show 167 of these trips ended in a customer offering to tip their driver, around a 60 percent success rate.

However, just 20 percent of these tips were paid through card payments with 80 percent offered in cash.

READ MORE Taxi drivers are set to lose hundreds of pounds in profits due to card fees

The increase in demand for contactless payments means taxi drivers are likely to see a reduction in overall net income in a blow to small businesses.

A spokesperson for ECD Technologies told “There is limited precedent for digital tipping whereas cash tipping has been a centuries-long tradition in Britain.

“Current digital tipping methods are socially awkward or inconvenient and deter rather than encourage gratuities. It would be regrettable to see this aspect of our cultural heritage recede as a result.

“The digital tipping process could be streamlined by the inclusion of an ‘auto tipping’ feature under the customer’s control within banking Apps. Current contracts law may need modifying accordingly to allow for such a facility.”

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The statistics show just 35 customers refused to tip drivers when paying by cash compared to 77 when paying through card.

Analysing the data shows tips can account for around 11 percent of taxi drivers’ total revenue stream.

A spokesperson added: “It is likely that taxi drivers will experience significant losses in gross earnings as the economy continues to transition towards predominantly digital payment processes, with tipping being the exception rather than the rule.

“Whilst service sector workers who are employees are guaranteed the National Minimum / Living Wage, taxi drivers have no such income safeguard. Tipping has heretofore been an important aspect of their trade to ‘Level Up’ with PAYE workers.”

It comes after ECD Technologies predicted taxi drivers could lose hundreds of pounds every year through the rise of digital payments.

They warned drivers are subject to commission charges of between 1.5 and three percent which would reduce the amount of money they can take for each journey.

Based on a fee of 1.75 percent, ECD Technologies suggested a driver only taking cards would lose £362 of their £30,000 takings compared to someone who only accepted cash.

Anyone interested in ECD Technologies research can contact them at [email protected].

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