Are card payment chargebacks costing your business money?

2019-07-01

A version of this article appeared in the July edition of the Private Hire and Taxi Magazine (PHTM)

In recent years, cloud-based data dispatch systems have grown in popularity with taxi fleets around the UK. Often, these systems include a passenger-facing mobile app which allows passengers to book and manage their journeys, sometimes including the option to pay for a journey by card.

While this is a positive development for some fleets, it comes with some drawbacks. First, new customers, or those simply passing through a locality (e.g. airport pickups), don’t want to have to download a new app just to pay by card. According to comScore, most phone users don’t download any new apps in a given month, so the barrier to entry is high. Second, the payment flow often means monies are paid directly to the fleet company, adding administrative cost for the fleet and resulting in long delays to drivers receiving their fare. Thirdly and perhaps most importantly, app-based card payments are at a high risk of chargebacks.

A chargeback is a transaction reversal, meant to serve as a form of consumer protection from fraudulent activity committed by merchants or individuals, for example, unauthorised use of a lost or stolen card. As a fleet, if you receive a chargeback notification, you may find yourself hit with a triple-whammy of costs: the chargeback itself (money will be refunded to the cardholder), a payout to your driver (who may demand or be entitled to his fare anyway) and a chargeback fee from your payments processor or bank.

It can be very hard for a taxi fleet to win a chargeback dispute process, because there is usually little documentary evidence that the cardholder is being disingenuous or untruthful by making a chargeback. This is particularly the case in so-called cardholder-not-present situations, for example when a payment is made during a phone call and keyed in by an operator. But app-based payments are usually considered cardholder-not-present transactions too, with the cardholder using an interface in the app which is for e-commerce use, more suited to online shopping than to an in-vehicle payment.

If your fleet is being hit by chargebacks, and it’s costing you money, CabCard can help. We specialise in providing in-vehicle card payment solutions to taxi fleets. Our pocket sized payment terminals offer the highly secure Chip & PIN and contactless EMV payment methods, with a chargeback rate close to zero. This will help you to save money and grow your business.