Recruiting or soliciting would-be passengers in Today’s world of scams, tricks, poverty and minimal free time is a serious challenge. Now and then a burst of insight may help a attract a handful of additional passengers. One innovative approach that appears viable is the result of the avalanche of ads plastering us about credit cards offering “cash back.”
Cash Back and Skip Forward
Credit cards offering cash back is partly an effort by certain credit card ologopolices to compete with it few fellow credit card oligopolies. The other part of it is the hidden scam of credit cards that we have gotten used to and accepted – or which some or us do not realize is going on. Now with “cash-back” incentives, the “cut” (or “vigorish”) these companies extract from their vendors has understandably increased. Compounding these hidden costs even further – never mind the usurous interest rates they charge their customers when they do not pay off their credit card bills almost immediately – credit card companies engage brokers (called “Merchant Account Companies”) to help process the payments. So the vendors have little choice but to pass on all or some of these costs to their customers in the form of higher prices.
In bygone days, when credit cards were introduced, I understood that it was illegal for vendors to charge customers less when they paid cash. Either this taboo (with a regulatory basis or not) has been removed, or it is being ignored by certain vendors who recognize there can be no remote enforcement of it. These vendors are hard to find. I bump into them often because, residing in New York State in a town lying on the New Jersey border, I try to fuel my car and truck in New Jersey – one of the two states (the other is Oregon) which did not eliminate “pump jockeys” around 1973, when our first “energy crisis” struck, and unofficially kicked off the U.S. Jobs Elimination Program (JEP). Now, when I pull in to fuel up, an employee immediately asks me, “Will this [transaction] be cash or credit [card]?” Presumably, this question is asked because the price for fuel paid for in cash is less. (Otherwise, why one a pump jockey ask?). If one is poor, or in a highly-competitive business like trucking, and with fuel prices considerable, this difference can be oppressive.
Outside the two states noted, paying in cash means getting out of your vehicle, walking into the store or kiosk, plopping down a large bill, returning to your vehicle to pump the fuel and, finally, returning into the store or kiosk to retrieve the change. Simply sticking your credit card into the pump is far more convenient – at least in warm, fair weather. But at the personal car level, one at least has a choice. One does not have such a choice when reserving a flight. But one easily could on motorcoach service – following the model outlined below.
These realities – particularly the recent innundation of ads about “cash back” — make me think hard about using credit cards (which I use minimally — often when I have no choice). Because most credit card companies and their brokers’ work is performed by robots, and with most banks answering their phones only with more robots, credit card companies generate huge profits. As these companies are hardly charities, and as the vendors are likely forced to pass all or much of these costs onto their customers, those vendors affording their customers choices to avoid these costs offer them something special – something many customers appreciate.
In the distant past – long before “cash back” became part of the commercial scheme — I understood that the companies skimmed roughly four to five percent of the cost of any good or service paid for with a credit card off the top. Now, with some companies giving card-holders five percent cash back for certain transaction (airline flights seem to provide the highest percentage of cash-back), I suspect that these companies may be skimming off an even higher percentage of the costs of certain transactions. Illustrating how these costs are passed on to the customer, I used to buy a pair of reading glasses or sunglasses for $1.00 at The Dollar Store. Even in this bargain bonanza, many customers still pay with credit cards. Recently, the cost these glasses increased to $1.25.
Vigorish and Rigorous
Certain types of unsubsidized transportation service may be obtained only with the use of credit cards, directly or indirectly (see https://transalt.com/article/drivers-v-robots-part-8-collecting-the-fares-skimming-the-passengers/). These modes include commercial airlines (see https://transalt.com/article/expanding-the-mode-split-dividing-line-part-1-exponential-airline-industry-corruption/) and transportation network companies (TNCs), like Uber and Lyft (see https://transalt.com/article/transportation-network-companies-even-worse-than-expected/). Many other modes, including taxis, limousines, subsidized fixed route transit (in most parts of the country), intercity passenger rail and motor coaches provide service that can be paid for by cash or through other instruments (tickets, fare cards, passes) or by direct credit card swipes. When these instruments are paid for with credit cards, the vendors – commonly subway services – simply retain less revenue, since they have to pay the credit card companies (and their brokers) their cut (or “vigorish”). As a consequence, the subsidies to those services which receive them (like fixed route transit), provided by taxpayers, must go up.
The use of credit cards to pay for transportation service has increased radically with the growth and common use of websites and apps. But the reality of the “vigorish” creamed off by credit card companies remained a constant for years, or perhaps decades. This vigorish is exponentially greater for TNCs, since they use their passengers’ credit card number(s) to tap into their riders’ personal information, and that of anyone in these passengers’ social media networks, to steal and sell it to fellow-Silicon Valley “associates” and those located through the country (and some abroad). Otherwise, it is inconceivable that this vigorish has not gone up for those modes for which passengers’ credit cards offer “cash back.”
Then, of course, there is the corruption of inflated charges. From some vendors – particularly those which “auto-deduct” monthy payments from credit cards – I am regularly overcharged. Often only by a tiny percentage. While I could successfully refute them, I cannot afford to spend an hour on the phone, fighting through layers of robots, to refute a 40-cent overcharge on a $20 item. Can we expect a transit agency or motorcoach company to do this? Since the answer is surely “no,” the money lost by selling rides through credit cards is yet greater than the agreed-upon vigorish.
Opportuities and Costs
The existence of this vigorish – particular as it is exaggerated by TNCs, to which passengers’ tacitly or unknowingly agree when they “accept” the terms of their rides – provides an unusual opportunity for other transportation modes able to accept cash as payment, and savvy enough to employ this opportunity rigorously. This is particulary true for those motor coach operators that “get the phone” with a live Earthing, or after a single, simple and short menu. When this occurs, the person taking the reservation has an opportunity to make a simple statement: “If you pay cash, we will discount your trip by X percent – and we won’t steal your personal information.” This receptionist should be prepared to explain how TNC’s steal your information, which they can easily learn about from reading a former National Bus Trader article of mine (see https://transalt.com/article/uber-and-lyft-defendants-most-vulnerable-lawsuits-most-lucrative-2/). On the remote chance a TNC might sue you for disclosing such information, your attorney merely needs to engage me. These companies would relocate to Saturn long before they would allow someone with the evidence I possess to share it with a jury, on the record, in a courtroom flooded with news reporters.
Offering cash fares is not quite cost-free. A company doing so much process the fare collection. This means that drivers must not only collect fares, but also make change. And the company must install a means of ensuring that drivers do not pocket some of the fares. And the cash must be turned in, counted, reconciled with other indicators documenting ridership, and deposited into banks. But motor coach services in many parts of the country – partiularly when deployed in commuter/express service or intercity/scheduled service – are already equipped to perform these functions. And as poverty in America continues to rise, credit card availability will likely decrease for public transportation users of certain modes (particularly fixed route transit and complementary paratransit service). So if motor coach companies offered reduced fares in return for cash payments, the percentage of rides paid for by credit card would shrink – and the company’s profits would increase. There is no need for me to remind motorcoach operators how thin their profit margins already are – and how difficult it is to find qualified drivers, much less fill passenger seats to capacity.
In truth, fare collection efforts may involve more costs than the vigorish creamed off by credit card companies. But even if they do, the notion of offering discounted fares, and the opportunity to share information to riders about the true costs of traveling by TNC, are likely worth it. The bottom line is that motor coach companies need more riders. If it costs as much (or slightly more) to procees cash fare payments than it does to pay off credit card companies, who cares? The critical decision-maker in this process is not the motor coach company. It is the would-be passenger – a decision-maker increasingly concerned with travel costs.
Twists and Turns
Were a would-be passenger contacting a motor coach company to pay for a trip by credit card to cancel the trip, he/she would have to call that company in advance of the scheduled trip and ask for a refund – and that company would have notify the bank (of the credit card used) to issue a refund to the would-be passenger. So even accepting payment from a credit card is not foolproof or effortless.
This reality may occasionally translate into a different scenario when a would-be passenger making a reservation, but paying in cash (upon boarding), fails to cancel his or her trip and turns into a “no-show.” The percentage of such would-be riders is hard to estimate. (“No-show” rates are extremely high in complementary paratransit service because on-time performance is often abysmal. It is hard to know what percentage of fixed route transit passengers simply give up when their vehicles are late, because they do not make advanced reservations.) Realistically, those who merely reserved a trip for which they would later pay cash, and who chose to cancel it, might not have the courtesy to notify the service provider of the cancellation – although a service provider that “gets the phone” would more likely receive this cancellation. (In contrast, someone needing to spend 15 minutes on hold would not bother.) And it would inivolve little effort to ask the would-be passenger to confirm the trip a day before its departure: Robots do this all the time for everything from doctors appointments to haircuts. Such efforts would greatly reduce the risk of “no-shows,” and would give motor coach companies opportunities to fill newly-available seats (perhaps at a discount, like Megabus used to do – and may still do).
Otherwise, telling a would-be passenger to pay cash upon boarding could be accompanied by some form of reservation guarantee. Hotels perform this function regularly: Their reception clerks take your credit card number, and “hold it” just in case you incur expenses during your stay. Motorcoach companies could develop some form of this process to ensure that “no-shows” will translate into cancellations – and, if not, that some penalty will be charged. But I see nothing wrong with a reservation cleak informing would-be passengers that he or she needs to call in advance to cancel – otherwise, he or she will be charged a penalty for the trip. To accommodate this practice, companies would likely need to have a credit card number available – to ensure payment for the “no-show,” and to discourage would-be passengers from failing to cancel a reservation. In fact, for tour and intercity motor coach services, trips fully-booked could have a “waiting list” whereby passengers originally denied a trip could be notified when their “stand by” status is upgraded to an acceptance (when those originally reserving trips cancelled them).
While some would-be passengers might be distrustful of giving a motor coach company their credit card number for a trip for which they would pay cash, the motorcoach company should keep two things in mind:
1. Hotels do this routinely, and most travelers are aware of the process and the need for it.
2. A motorcoach company that “gets the phone” immediately with a live Earthling is far more likely to convey a sense of trust to the passenger.
In this latter case, imbued with a sense of trust, much less offered a chance to save money by a company whose staff got the phone instantly, a would-be passenger would likely not mind giving the company a credit card number. All credit card holders know that they can call their credit card’s bank to dispute a charge, and that when they dispute charges relentlessly, their “word” is usually taken, and credit is issued. Unfortunately, this can mean time on the phone, often with layers of robots. But eventually the customer will get the credit (effectively a refund for a trip not taken). So, ultimately the would-be passenger experiences no risk. Otherwise, his or her comfort would likely be increased further if the service provider promises to send them a “reminder” about the trip a day or two in advance by email or text – to which those wishing to cancel it can easily reply. As noted, this latter effort can easily be performed by robots – as many confirmations for all sorts of things are done now (mostly through emails or text messages) without seriously inconveniencing the customers.
Fleshing out the Bones
This idea is, of course, only a skeleton. Each company must put a bit of time into creating the structure and mechanics to make it work. But within this skeleton, as per the sketch provided above, lies a simple means of increasing ridership. I feel confident that be customers and would-be passengers would appreciate the opportunity to save money that a company offering such a discount would present.
Otherwise, to make this approach really work, and to make customers feel comfortable with the responsibility to pay for the trip if they fail to cancel it, motor coach companies must answer the phone live. Like it or not – and the largest companies will like it the least – this is always, and will always be, a bottom line booster to renenue-generating and profit-making. The rarity of companies answering their phones makes one that does so special in the minds of consumers. This has also become a footnote of many neighborly and friendship conversations and social media exchanges: “Hey, did you know that Corporation X gets the phone?” In my local community, this is the highest form of praise a vendor of any kind can get. And it is my way of rewarding them for providing this form of service. The point is that this approach will not only facilitate the cash-discount innovation described above, but will help the company’s image and business in general.
This idea is but a small one that might increase ridership only slightly, trip by trip, over time. But after setting up the cash-processing structure, there is nothing more to it (apart from the fact that a company offering “cash discounts” may benefit from advertising the service that comes with it). No legislation needed. No lobbying. No investment. No legalities. No risks. Just more passengers, more revenue and more profits.
Gain and Necessity
One highly-profit-making leach of modern society – credit card companies – has created a unique opportunity for certain industries that could provide benefits to their customers by helping them circumvent these added costs. Given the traee-offs noted, why would a motor coach company not offer this discount? Why would one not take advantage of all the other information-sharing opportunities that could accompany it, which might make customers more likely to take additional motorcoach trips in the future, and make them more loyal to the companies that offered to help them in this unique way?
Particularly as as result of COVID, much less other factors that have decreased ridership in recent years (including the decreasing ability of many would-be riders to take motor coach trips of certain types at all) — along with the slim profit margins most motorcoach operators earn — a savvy motor coach company would do well to employ every idea to increase ridership it can find – even if the increase is not dramatic, and even if some additional work is needed to put such an approach into effect.
Declining ridership is the plight the motor coach industry finds itself in. Offering a solution to increased costs from Today’s highly-advertised “cash-back” environment – part of which must be borne by the passengers in the form of increased fares – may not simply be an opportunity. For many motor coach operators teetering on the brink of survival, it may be a necessity.