Technology has changed the taxi industry so dramatically that it’s now questionable whether traditional cab services can avoid extinction. If it’s going to survive, the traditional taxi industry may need an overhaul from the ground-up, FinTech style.
That’s where WaveCrest comes in. The corporate payments company offers the taxi industry its MyFare Visa Prepaid Card, and its latest features aim to solve some of the most basic, but deep-rooted, problems in this sector.
Only weeks ago WaveCrest rolled out new capabilities of the MyFare Card at the Taxicab, Limousine and Paratransit Annual Conference. The card now lets taxi fleet companies and their drivers – who operate as independent contractors – to automate payments between each other.
It seems simple, and it is. But according to WaveCrest Vice President of Strategic Account Management Nil Abak, there is a lot that the taxi sector needs to reexamine in order to remain competitive and step away from its legacy processes.
“We all know this industry is being totally reformed with the entrance of new types of business models, so there have been a lot of inefficiencies in a lot of areas,” Abak said, “but especially in the payments area.”
[bctt tweet=”There have been inefficiencies in a lot of areas of the taxi sector, especially in payments”]
Traditionally, drivers will have to physically line up at the end of their shifts to collect their payouts from taxi fleet companies; those payouts often come in the form of a paper check, the VP added.
“The thing we thought of as a key opportunity there was a lot of the inefficiency based on the way the payments were made for drivers,” Abak said.
And this payout isn’t as simple as calculating hourly wages. Abak explained that the biggest calculation in this exchange is the portion of credit card payments made by customers in the taxis will ultimately go to the drivers. Plus, she added, there is also the issue of calculating management and policy fees that drivers have to pay to their employers.
In the midst of all of this, there are intermediary cashiering companies that help taxi fleets conduct these calculations.
Abak agreed that this process is “very, very complex,” but one that doesn’t need to be. The executive explained that prepaid debit cards are a natural solution to many of these points of friction – WaveCrest’s newest features allow drivers and fleet companies to send payments back and forth between each other, and to automate the cashiering process when these companies need to calculate how much money a driver should receive.
According to Abak, fleet companies are especially excited about the solution. “First of all,” she explained, “they don’t have to spend a lot of overhead or effort on manual cashiering.”
Traditionally, drivers line up and get a paper check from the cab company, a process Abak explained as “a lot of work and a lot of confusion that keeps drivers off the road.”
If it’s not a paper check, then many cab firms actually pay drivers in cash, creating money management and security issues for these businesses. Prepaid cards instead offer a combination of automation and electronification to ease this friction.
“There is no cashiering, no overhead, no effort needed any longer – the fleet companies really love it,” Abak said.
On the driver side, of course, cutting the requirement to stand in line and wait for cash or a paper check is a plus. But the executive also explained that even if cab companies provide direct deposit, drivers still have to wait to see their funds. With a prepaid card, drivers get their earnings deposited directly to the card, which they can use instantly.
On top of all of this, WaveCrest has added in a mobile app that lets drivers get alerts when they receive a payout from their cab companies, track their spending and transactions, and sent money to and from other drivers.
“That’s very important for the cab industry, whose drivers are on the road every day, all day,” Abak said of the mobile solution.
It’s about time that the traditional taxi industry gets a FinTech facelift. Prepaid cards, automated payments and mobile apps are just the beginning to helping the cabbie market get back on the road to competing with their tech rivals, and to streamlining payments within these organizations.
Abak said WaveCrest wants to be on that road, too. “We will continue to build on our roadmap as far as we can see the gaps and opportunities in the space to remove the inefficiencies and create value,” she said. “The key message in this is we’re bringing real efficiency and real value to both sides.”