Ingogo to skirt Cabcharge undertaking to allow competitors to use its cards

Third-party and rival payment processors will soon be able to accept Cabcharge cards for the first time in the Australian taxi payments industry, after the Australian Competition and Consumer Commission (ACCC) accepted a court-enforceable undertaking from Cabcharge Australia.

As part of the undertaking, Cabcharge has agreed to a five-year period to negotiate with third parties in relation to providing access to the system that will allow them to process Cabcharge cards; execute an agreement with third parties who apply for access according to provisions set out in the undertaking; and provide third parties with technological support to enable them to process Cabcharge cards.

According to ACCC chairman Rod Sims, to date, third parties have been unable to reach an agreement with Cabcharge to process its cards on terminals, limiting others' ability to compete with Cabcharge for accepting and processing non-cash payments in taxis.

"The undertaking opens up this market to further competition, and will provide third parties with the ability to process Cabcharge cards for the first time," he said.

"The undertaking provides a clear pathway to facilitate third parties processing Cabcharge cards. If third parties obtain access, this will allow them to better compete against Cabcharge for processing revenue, as Cabcharge will no longer be the only terminal in a taxi that can process all forms of non-cash payment."

The undertaking by Cabcharge arose when in 2010, the Federal Court penalised the company to the tune of AU$15 million for refusing to deal with certain firms and engaging in predatory pricing.

This came about after investigations by the ACCC into allegations showing that between 2011 and 2012, Cabcharge refused to deal with a third-party processors making requests according to the Request Processing Policy.

The ACCC said it considers the undertaking a "timely solution for third-party processes".

"It puts in place a clear access regime for appropriately qualified third-party processors," the commission said.

Despite the undertaking, long-time rival Ingogo CEO Hamish Petrie said it is only Cabcharge's "nice way" to appease the ACCC.

"From the undertaking on ACCC website, the standard agreement is only offering 20c per transaction, which on an average fare of AU$34, it means Cabcharge is charging [the] equivalent of a 9.5 percent merchant service fee," he said.

"Not only are they ripping off their customers, they are now proposing to rip off terminal providers."

Petrie said the company prefers the "better path" to partner with expense-management solution Concur, and provide the Ingogo payment experience that way.

"In Sydney, Melbourne, and Perth, our fees are half the cost of Cabcharge proprietary cards, with full and detailed trip data automatically fed into Concur. Why would any smart customer keep paying Cabcharge?"