Taxi Fare Evasion on the Rise: Is it Time to Adopt Cashless Payments?

As cases of taxi fare evasion rise, it might be time for taxi drivers to embrace cashless payment systems.

By Oliver Ward

Taxi fare evasion cases across Singapore are rising. That is what new data from the Public Transport Council (PTC) suggests. Between May 2015 and May 2016, there were a reported 279 cases of taxi fare evasions, but in a concerning revelation, this figure rose to 345 cases in the May 2016 to 2017 period.

The rise in cases occurs despite the introduction of strict new penalties in May of 2016. The fine for first-time fare evaders now stands at S$200 (US$147), with repeat offenders having to cough up S$400 (US$294), double the 2015 punishments.

If stricter punishments have not helped, what will curb the fare evasion trend?

One avenue being explored to reduce the numbers of fare evasion cases is the introduction of cashless payments. With apps like Uber and Grab, there are very few fare evaders due to the customers’ ability to pay for the ride through the app prior to receiving the ride. The apps themselves are also able to effectively punish fare evaders by preventing them booking another ride until any outstanding sums are settled.

While traditional street-hailed taxis do not have the luxury of punishing fare evaders in this way, the introduction of a cashless system may help reduce the number of fare evasion cases. A system whereby customers could pay for the ride instantly through an online e-wallet connected to the meter would remove any possibility of consumers from running off without paying or simply refusing to pay a fare.

Taxi drivers have been reluctant to embrace cashless payments in the past

Previously, taxi drivers have resisted adopting cashless technologies. They frequently cite the long waiting times required for financial institutions to process the payment and release the funds. There have also been concerns that the technology would be expensive to install and it would mean the existence of an electronic record of their earnings, which many taxi drivers prefer not to have to maintain a portion of their income undeclared.

However, to keep up with the growing cashless trend, taxi drivers may have to adopt the technology or risk becoming outdated. From June 2016 to June 2017, contactless card transactions were up 82%, as the public increasingly turns to cashless payments to meet their payment needs.

Jeremy Soo, head of the Consumer Banking Group in Singapore at DBS bank, said, “[Customers] are taking to cashless payment in increasing numbers, and are withdrawing lower amounts of cash and less frequently from our ATMs”, he added “with the introduction of user-friendly digital payment modes such as the QR code for day-to-day activities… we expect cashless payment adoption to accelerate”.

ComfortDelGro Taxis have adopted QR code payment 

ComfortDelGro, in partnership with DBS, launched their new QR payment system in August. Customers are now able to pay through their smartphone in ComfortDelGro’s 16,000 taxis across the city-state. Customers simply have to log onto the ComfortDelGro app and select cashless payment, when they will be prompted to scan a QR code on the taxi driver’s terminal. The app will then charge the customer for their fare, with the whole transaction taking place online.

ComfortDelGro recently announced a partnership with Alipay. This means users now have the option to make fare payment using Alipay. More than 10,000 transactions have been made since this was launched in July.

DBS are offering small and medium businesses free waivers and competitive financial packages to encourage more businesses to adopt cashless payment systems.

Grab are also looking to enter street-hail market with their own cashless payment system

ComfortDelGro is not the only cashless provider looking to get ahead in the street-hail market. In August, Grab launched GrabNow, which allows customers to flag down a taxi and pay for the fare through the Grab app.

A partnership between Grab and POSB and DBS allows taxi drivers with accounts with either banking provider to instantly receive fares transferred through the Grab app. Melvin Vu, head of GrabTaxi Singapore said, “we believe that our latest Instant Cash Out feature will encourage taxi drivers to embrace the convenience of cashless payments and bring more taxi drivers into the cashless society”.

Grab has already signed partnerships with taxi companies SMRT, Premier, Prime and Trans-Cab, across a total of 10,390 taxis.

Will it take off across Singapore?

Dr Lee Der Horng, a transport researcher at the National University of Singapore said, “I don’t think that GrabNow can win over many passengers unless they offer handsome discounts on fares”.  Senior lecturer at the Singapore University of Social Sciences, Walter Theseira agreed. He said, “If you prefer to use street-hail, do you want to go through the trouble of pulling out your phone, activating the app and telling the driver you want to do this?”

Customers who already have a Grab or ComfortDelGro app, are likely to be booking taxis and rides through these apps already. These are not the demographic who are on the streets hailing taxis.

In China, cashless payment for taxis was able to take off because of the use of WeChat Pay. With the whole population adopting apps like Alipay and WeChat Pay, the use of cashless payments in taxis didn’t require a specific taxi app like the schemes being rolled out in Singapore. In China, cashless payments for taxis simply uses the same app which can be used to pay for any other product or service.

The current cashless options are unlikely to deter fare evaders

Under the current model, fare evasion will likely continue to plague the taxi industry until cashless payments are adopted across the board, without the need for a specific taxi app. While there is still the possibility of paying in cash, there will be the possibility of riders refusing to pay or leaving without paying.

Singapore taxi drivers would benefit from looking at the Chinese model and finding a payment solution that would work across the board, like WeChat Pay or Alipay. Then taxis could eliminate cash entirely and would not have to rely on the customer already having the specific taxi app on their phone.

This model may not be far off, but it relies on the big taxi companies coming together to find a sole cashless provider which works for everyone. Only when they collaborate on this level will taxis be able to stamp out fare evasion and reduce it to a thing of the past.