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DON’T CHARGE MORE: The card machine question every taxi driver needs to get right
The final stage of a taxi journey can create legal and operational risks for drivers and operators if card payments are not handled correctly. While passengers increasingly expect to pay by card or contactless device, licensing requirements and consumer payment rules are separate issues.
Drivers must first establish whether they are required to accept card payments. There is no single national licensing condition requiring every taxi and private hire driver in the UK to carry a card terminal. Requirements are set locally, meaning drivers must check the conditions attached to their vehicle, operator and driver licences.
London has one of the most detailed mandatory systems. Transport for London (TfL) requires taxi drivers to accept card and contactless payments through an approved fixed device located in the passenger compartment. A handheld terminal alone does not meet that requirement.
Outside London, arrangements vary between licensing authorities. Some councils require electronic payment facilities, while others set technical, receipt or reporting requirements. Some leave the choice of payment method to drivers and operators. Requirements in a neighbouring district cannot be assumed to apply locally.
Private hire payment arrangements may also differ from taxi rank and street-hail journeys. An operator or app may collect payment at the time of booking, retain card details or allow the passenger to pay inside the vehicle. Booking terms and quoted fares should explain the arrangement before the journey begins.
A separate national rule applies to payment surcharges. The Consumer Rights (Payment Surcharges) Regulations generally prohibit traders from adding a charge because a consumer uses a personal debit card, credit card or another covered payment service. The expanded prohibition came into force on 13 January 2018.
As a result, a driver cannot normally add a percentage or fixed “card fee” simply to recover terminal or transaction charges. Calling the amount an administration fee does not change its character if it is only applied when the passenger chooses to pay by card.
Operators can still account for payment costs when setting fares. Transaction fees can be treated as part of the general cost of providing the service, alongside fuel, insurance, vehicle finance and dispatch expenses. The legal problem arises when an additional payment is linked specifically to the customer’s chosen card.
Regulated taxi tariffs also places a restriction on any payment received from card payment transactions. Where a meter or licensing tariff applies, the driver cannot simply increase the fare to cover the cost of accepting payment. Any permitted extra must be authorised by the relevant tariff or licensing rules, rather than added through a notice placed beside the card terminal.
Equipment failure also needs to be managed carefully and is a very grey area for all concerned. Batteries can run flat, software can stop responding and mobile connections can disappear. Drivers operating under a card-acceptance condition should test their equipment before starting work and follow the licensing authority’s procedure when a device fails.
A malfunction should not be used to pressure a passenger into finding a cashpoint after the vehicle has advertised card acceptance. London’s rules require the approved device to be working, while TfL states that passengers must be able to pay by card or contactless without a surcharge. This has become a hugely contentious point as the risk is loaded fully on the driver even when circumstances out of there control arise.
Operators should also establish who carries the risk of chargebacks, fraudulent cards and unpaid fares. Payment arrangements that transfer every failed transaction or disputed payment to drivers may affect recruitment and retention, even where the passenger-facing service appears straightforward.
Cash remains important for passengers who prefer not to use digital payments or need greater control over their spending. Businesses moving towards cashless operation should consider accessibility and explain payment arrangements before accepting a booking. Most taxi drivers still welcome cash payments.
