Minneapolis cabs to take credit cards

  • Article by: ERIC ROPER , Star Tribune
  • Updated: January 13, 2012 - 11:55 PM

The City Council passed a law that requires taxis to accept credit cards by June 1. Opponents, however, worry about saddling drivers with transaction fees.

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Photos by ELIZABETH FLORES • eflores@startribune.com Taxicab driver Ansumana Soumahoro held up his credit card reader on Friday in downtown Minneapolis. Under a law passed 11-2 on Friday by the Minneapolis City Council, cabs without electronic readers will have until June 1 to install them.

Photo: Elizabeth Flores, Star Tribune

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No cash for the ride home? No problem in Minneapolis, as of June 1.

The Minneapolis City Council overwhelmingly supported a new law Friday requiring city cabs to accept credit cards starting this summer. The change, which also requires cabs to install electronic credit card readers, passed on an 11-2 vote.

The effort was led by Council Member Gary Schiff, who said he doesn't want people to become stranded at night because they do not have enough cash. Opponents, including the Minneapolis Taxicab Drivers and Owners Association, said it will be a financial burden on drivers who have to pay the bank fees.

"We should be worried about being a hospitable city that allows the easiest way possible for people to get around," Schiff said.

Other cities with credit card mandates for taxis include New York, Boston, Houston, Los Angeles, Chicago and Dallas.

"I think that this is a business decision that I don't think that we as a government have a right to legislate," said Council Member Meg Tuthill, who voted against the motion along with Council Member Cam Gordon. She noted how expensive credit card fees can become for small businesses.

Several taxi drivers waiting for passengers outside the downtown Hilton on Friday afternoon said the new requirement was a positive step and a sign of the times. Gustavo Morelos said his taxi company, Ecco, installed an electronic card reader in his cab several months ago.

"People like to use the credit cards," Morelos said. "Like today, for example, I got four credit cards. No cash, just cards. So I've got no cash in my pockets."

But who pays the bank fees? "Me," he said with a laugh. "That's the part I don't like."

Yemane Mebrahtu, president of the Minneapolis Taxicab Drivers and Owners Association, said the taxi companies that pay the banks often pass along higher fees to the driver. That can amount to a 5 to 7 percent fee for drivers.

Since the metered rate is fixed, drivers can't make up the cost by hiking prices.

"The credit card issue boils down to the point that any fee that adds to the driver automatically undermines the meter rate," Mebrahtu said. He added: "We're not opposing the credit card. But the question [is] who pays the fee?"

Taxis without electronic readers have been able to accept credit cards using paper receipts or imprint machines. But it's a risk for drivers, who don't know if a card has been declined until slips are sent off to the credit card companies.

"If you [lose money because the card is declined], the company is not responsible for that," said driver Ansumana Soumahoro. "So that's why I decided to buy my own credit card machine."

Growth of credit use

The council was initially slated to take action last year, but the vote was delayed as city attorneys analyzed whether the city could mandate that the fees be shared. They advised Schiff that the city does not have the authority to control who pays the fee, or to require a surcharge on each purchase.

Bari Niaz, owner of Checker Cab, said he is preparing to buy 70 to 100 machines to install in his vehicles. He said the new law is a "good idea," partly because of how many people use credit cards.

"I guess we've got to have it, that's the reality of business," Niaz said. "People go that way and you have to be ready for it."

Eric Roper • 612-673-1732 Twitter: @StribRoper

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  • Gustavo Morelos, a taxicab driver for Ecco, said Friday in downtown Minneapolis that he has had an electronic credit card reader for months and it’s a great convenience for customers. But he’s the one to pay the bank fees, he noted with a laugh.

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