Taxi fares on the way down

Catching a taxi is a regular part of day to day life for business people and a major expense for companies. Jost Stollmann from Tyro Payments explains how it could get a whole lot cheaper in the future.

Tyro Payments is the only independent EFTPOS provider in Australia competing “heads-on” with the big bank oligopoly. For us momentum is building to have a crack at one of Australia’s longest standing monopolies, Cabcharge, a company surcharging Australian cab users with 10 per cent since 36 years when paying their cab fare with a card.

The 10 per cent taxi surcharge contributed $90 million of revenue to Cabcharge in the 2012 financial year charged on $1.05 billion in taxi payment turnover.

Businesses and consumers pay 10 per cent in a cab every time they use a credit, debit or Cabcharge card, yet only pay between zero and three per cent in a shop. The payment system in cabs is more expensive than in a retail store, but there is no justification for the 10 per cent.

Tyro and its business partner CabFare provide their own efficient real-time payment solution in thousands of cabs. Four times in recent years, Cabfare has requested Cabcharge grant access to processing Cabcharge’s proprietary cards and was repudiated every time. As a consequence, CabFare has submitted a request to the Reserve Bank of Australia (RBA) to subject the $1 billion per annum Cabcharge payment processing business to regulation so as to open the market for competition. This would significantly benefit Australian business and consumers.

You could soon enjoy cheaper cab fares with the 10 per cent card surcharge you pay for taxi journeys slashed to 5 per cent, under such regulation. The waste of multiple terminals in cabs and the fraud engendered by drivers cashing in paper vouchers would be eliminated. Today only one third of an estimated $4.6 billion spent on cabs in 2011 in 209 million separate journeys is spent using credit or debit cards. Fairly priced, consumers would prefer the security and convenience of card payments driving growth in the industry.

Cabcharge operates its payment terminals in 97 per cent of Australian cabs. Cabcharge is not registered with APRA, holds no Financial Services License or Credit License with ASIC and is not governed by the RBA, but the proprietary Cabcharge payment system processed $438 million in fares 2012 financial year.

Professor Allan Fels, Chairman of the Victorian Taxi Industry Inquiry and former Chairman of ACCC found “the best way to provide choice is through an open, competitive market. Cabcharge has a monopoly. You have no choice if you pay electronically; you have to pay 10 per cent extra. That’s really high. There is no competition. You either pay 10 per cent or you pay cash,” he said.

The RBA’s regulation of Visa and MasterCard interchange fees resulted in an estimated $1.2 billion savings for Australia’s retailers and consumers. We encourage the RBA to intervene and designate the Cabcharge payment system, for the benefit of the taxi industry, business community and Australian public.


Jost Stollmann is Executive Director and Chief Executive Officer of Tyro Payments. In 1984 he founded and grew the German system and network integrator CompuNet Computer AG into a one billion dollar company. In 1996, he sold it to GE Capital US and led the integration and expansion of GE Capital IT Solutions across Europe.  In 1998, as Federal Shadow Minister of Economy and Technology, Jost ran his successful election campaign making a significant contribution to the landslide victory of Gerhard Schröder to the Chancellorship of Germany. Jost commissioned an award winning 40m high performance racer-cruiser and sailed with his family around the globe before settling in Sydney in 2004.