Variations in Tip Button Math Nets Cabbies $5.2M Annually
Monday, January 05, 2015 - 06:42 PM
(Kate Hinds/WNYC)
Credit card machines in NYC cabs suggest tips of 20, 25 or 30 percent. But Ben Wellington, the Pratt professor behind the blog I Quant New York, found that many riders were tipping 21 percent. Why?
It turns out that one payment system, by Verifone, calculates the tip based on the "base fare," which is $2.50 a mile, plus any surcharges. Another payment system, by Creative Mobile Technologies (CMT), calculates the tip on that plus taxes and tolls.
"When you tip 20 percent on a fare and a toll, or a fare and a tax, it’s actually a little bit higher," Wellington said. "So it makes everyone look like they’re tipping a little bit more."
That little bit more adds up. Riders in taxis with CMT machines paid a total of $5.2 million more than they would have if they'd ridden in cabs with Verifone machines. For a driver, it adds up to an extra $200 in tips per year, Wellington found.
While the difference might be just a dollar or two per ride for passengers, Wellington thinks the inconsistency isn't fair. "When you get into a cab, you shouldn’t have to stop and look at who the payment provider is in the back," he said.
Wellington details his methodology and findings in a post at his site.
A spokesperson for the Taxi and Limousine Commission said the machines are required to let riders set their own tip amount and have a preset 20 percent option, but that the rules are silent on how preset buttons are calculated.
KAT AARON
Kat Aaron is an Associate Producer for WNYC, where she is part of Transportation Nation, a public radio reporting project that combines the work of multiple newsrooms to provide coverage of how we build, rebuild and get around the nation.
