Four years after the District revamped guidelines for the city’s taxis in an effort to modernize the fleet, officials have again issued rules aimed at keeping up with rapidly changing technology.
By the end of summer 2017, the District’s 7,500 taxicabs must have digital meters and offer passengers the convenience of “tap and go” payment using such options as Apple Pay, in addition to credit cards and cash.
Digital platforms are new territory for the U.S. taxi industry, which historically has relied on mechanical meters that require maintenance and frequent calibration.
But as technology-based transportation services become more popular, cities across the United States are switching to smartphone-based systems that integrate GPS-reliant meters and electronic dispatch, payments and navigation.
San Francisco taxis have successfully tested the technology, and a small share of New York taxis are experimenting with “innovative solutions” to modernize that city’s fleet.
The District’s plan to fully transition to digital by Aug. 31, 2017, is an ambitious approach by regulators who say immediate and bold changes are necessary to keep the ailing industry viable, help reduce costs for struggling drivers and improve the rider experience.
The D.C. Department of For-Hire Vehicles has been testing a digital meter system it developed in-house and plans to distribute it to drivers free this fall.
Chairman Ernest Chrappah said the new regulations will significantly cut expenses for drivers who invest roughly $2,400 to outfit their cabs to meet the current requirements, in addition to frequent meter calibrations that cost $50 each.
“We can keep the old system that is costly — that is broken. Or we can transition into a new system that is cheaper, better and more convenient,” Chrappah said. “The taxi meter has been here since the 1890s. Why do we keep building systems around it? It is broken. Let’s get rid of it, and let’s create a system that can be upgraded without a huge cost to drivers.”
For passengers, the biggest change will be the guaranteed ability to pay online and receive receipts via email, text or printout.
Officials say the system will eliminate the anxiety of getting into a cab with a broken credit card reader and will allow cab companies to offer discounts and pool services. The old meter does not allow for such changes in fares.
Receipts, whether sent electronically or printed, will be required to contain new details such as an image of the route the vehicle took during the ride and starting and ending times.
Consoles integrated with the new meters will be available to riders in the back seat and allow them to share trip details with friends and relatives, similar to Uber and Lyft apps. The city envisions a system that eventually rewards frequent taxi riders with discounts and free rides.
The new regulations come as the industry tries to stem losses in the face of increasing competition from app-based services such as Uber and Lyft. The number of people choosing taxis has steadily declined in recent years; riders are projected to take 13 percent fewer rides this year than last.
Technology is changing things for the industry so fast that regulations the city approved in 2012 to modernize the fleet are already “obsolete,” the notice of the new rules says, and to keep the industry competitive, “major changes must start immediately.”
If the industry wants to remain viable, “it must begin the long process of moving from [the old meter systems] and patented dome lights to lower-priced, innovative technologies to improve revenue, increase customer choice, support the growth of accessible vehicles and open the door to future innovations.”
The road to changing the District’s taxi industry has been rough.
Drivers and companies fought many aspects of the 2012 overhaul and protested the costs associated with the purchase of new meters, dome lights and painting their vehicles to meet the now-required red and gray color scheme.
The mandate requiring all cabs to have a credit card payment system also came with monthly fees for the equipment and transaction fees imposed by providers of the payment system consoles.
But drivers ultimately embraced the system, acknowledging that fewer customers carry cash these days and noting that tips tended to be higher with credit card transactions.
This time around, many in the industry see the latest round of changes as encouraging.
Roy Spooner, general manager of DC Yellow Cab that has 500 taxis, said the new regulations could help level the playing field by making it easier for his drivers to compete with private cars that only need a smartphone to do business.
“We’ve got to reduce the driver expenses — do the things that make sense for the consumer but are not that expensive,” Spooner said. “This is an attempt to start moving in that direction.”
Spooner, who fought some of the 2012 regulations, said the digital system involves less equipment and fewer restrictions, which perhaps would allow taxis to lower their prices.
“With the digital meter, at 2 p.m. when usage goes down, we can say we are going to run 20 percent reductions — we can compete,” he said. “We start to get more nimble. We give the customer what it wants.”
Chrappah said the latest changes are the first in a series of changes expected to be unveiled in coming months as part of a continuing effort to make it easier for taxis to compete.
But while the taxi industry is mostly welcoming the changes, the companies that provide the current payment systems are expected to take a big hit. According to the city, the companies have terms as long as five years and bind taxi operators to monthly fees of $35 or one-time fees of $200 to $800, plus credit card transaction fees as high as 4.5 percent.
Chrappah said the department has had problems with companies complying to the new rules.
For example, many have failed to integrate the DC Taxi app into their systems, as required, to facilitate e-hailing. As a result, Chrappah said, four out of six providers have had their license renewals denied.
Creative Mobile Technologies was one of those companies. Jason Poliner, its vice chairman and president, called the department’s decision “abrupt and arbitrary.” The company has appealed.
“No business can operate in this kind of environment,” Poliner said. He called the decision to switch to the digital payment system “shortsighted and ill conceived” and said it could disrupt the industry. Companies could potentially pull their equipment, leaving many taxis without a credit card system during the transition.
Officials with the For-Hire Vehicles Department say that they don’t anticipate that happening but that if it does, the city is negotiating with several companies interested in providing digital systems at a fraction of the cost drivers are paying now.
Chrappah said the message to the companies and the taxi industry is the same: Be part of the future or be stuck in the past.
“The drive toward smart cities, autonomous vehicles is not going to stop,” he said. “For a taxi to be relevant, they have to be digital, and they have to be extremely customer-focused.”