back that up. san francisco, until 12 or 13 years ago, it will come was the only one processing credit cards, and the drivers did pay perry anap. y. 12 years we did not. why did it come to this now? you know credit card usage in the past 12 years has taken off like this. the yellow cab at $3 million in credit crude -- credit-card transactions and a growing was become something that we could not handle. by the way, it is not companies verses drivers. yellow cab does not own a medallion. there's not a cab company that

owns a medallion. it is a cooperative of owners. you get people to manage sphinx and run things, and these are expenses that the medallion holders and everyone in the company is incurring. the other thing is they came to us and said if you want to be able to pass on the charges like they do everywhere else, here is what they will require. we could no longer be the processor. we have to turn it over to a third-party processor. we have to put in receipt terminals. -- put in rear seat terminals. as far as i% mentioned a minute ago, my understanding is the processing fee itself as between

2.5% to 3%. we also get calls daily, and this is being paid for by the processor, i was overcharged or charge me twice. different than a restaurant. there are added terminals and all of the calves in an expense for the data that is being transmitted to the calves. there is a bill every month for that. there are other expenses that bring it up to a higher peak. president chiu: again, i am trying to think of what your situation is different than a restaurant worker. obviously you're still passing data back and forth. you still have to implement the machinery to make that happen. there's not a capital cost, but it does seem to be unfair to push the cost on to the worker. to g>> i cahave never run a

restaurant, but i can tell you the expenses we get are fairly high. again, the equipment we're putting in cabs continue to have to be changed. they have to be upgraded and maintained. this equipment is expensive, maintaining it is expensive. we're talking about calls every few minutes during regular business days, people calling saying there was an issue a day ago or three days ago with their credit card charge. i had one yesterday where a guy was charged $88.88. and he was calling to make sure it is reversed. we have to call and make sure it was being reversed. i call the customer back. this costs money. you are paying money to do this

work. supervisor chiu: this strikes me as the cost of doing business. >> this is the cost of doing business. this is not a san francisco. every major city this cost is incurred by the drivers, and we just have it here. this is a change that has existed everywhere else in america, and it is very expensive to provide all of the other things that we do. supervisor chiu: could you elaborate a quid pro quo with the deal you're talking about that was struck with the mta. part of my struggle is we're not privy to those discussions that happened before. i am trying to understand the deal that was struck before hand. >> it was pretty public.

one, you know longer can be of the merchants of record, cannot be the processor. supervisor farrell: was that a loss for you? >> if we have had more control, perhaps the cost of have been less. we passed it on, it is out of our hands. it is taking the 5% and taking the cost. i know what the categories of the costs are, but i do not know the exact figures. we would prefer to remain being our own merchant. the rear seat devices, someone mentioned there is advertising. yellow cab does not have any advertisements appeared in i'm getting great feedback once people are getting used to them. that is an expense but is

incurring. i never got the exact cost of each unit. the electronic wave bells? we have done all the work to provide them. the mta has start -- not started collecting them yet, but we have developed the ability. that was their mandate to us. i do not know. once we have i to person but does this and bills as for a lot of stuff, and that was included in the billing to set up the process. president chiu: i have to read it, it is very difficult to find out, given the stakeholders involved between the companies and a medallion holders, everyone is saying different things. for me, the perspective i try to bring to this is the perspective of san francisco and to get into cabs. i get into them fairly often. one argument that as compelling as this would create a

disincentive for cabdrivers to accept credit card transactions, which seems to have in the wrong direction as far as customer service. could you address that? >> sure, and the one part of that that would be part opinion and part fact is that i do not feel it would be a disincentive. i think we're dealing with a minority of drivers. where -- we have some guys and we get calls and complaints periodically during the week of someone saying they do not accept credit cards. yet the factual part is that the volume over the past three or four months has ever taken a dip because all the sudden drivers were turning down credit cards.

there are a handful that are saying no, but the majority are saying they take credit cards. but hard is factual. -- that part is factual. >> my name is lee hous ekeeper. i ride in cabs every day for 25 years. i just came back from last angeles for a week. i rode in cabs there. last month i was in new york for 10 days. in i love cabdrivers. they make my life so much easier. the cab ride before cost about $17 and a $5 tip. now it is $20, still $5 tip.

i supported that for the drivers, because of the 5% there were paying, which with unfair and have not on the rate increase since 2002. it was hard on them. i have great conversations and learn more about what is going on than it did from the chronicle. back and forth my day is $8 more expensive each day because i was paying -- i am glad to pay this. a couple of the dollar's goes towards the credit card companies. i am understanding this is about tagging the head company -- the cab companies. to me they perform an incredibly valuable service. you guys want to know what is going on, you bring in a dispatcher. they know what is going on. we need those dispatchers.

insurance fees could put out of business my cap companies. all of the expenses and running them. they did not get any money as far as i understand. i am happy they got the money. as a rider of over 25 years daly, i hope they do not have them for any more money. >> good afternoon, supervisors. i would like to have mark farrell answer questions. i was sleeping of this came back and forth to the 100 time and forced me to come out and organize it. and i've organized it again. what is going on with the whole story? when we read the protests, then

we will asked to have 36 hours of town hall meetings where the deputy director was here. there were people sitting back in the terminals. when we talk about it, she kept saying continuously that if we stop the credit card charges and backseat machines, these people will suffer. much later on we can to note there are contract. [inaudible] the second thing with it, people keep comparing it to the 5% feet and other towns. i-- fee in other towns.

then comes to this other story about this equipment. yet, companies are getting $6.7 million. the vendors are getting 6.7 percent signed. i can work out the numbers in front of you. they are making $13 million out of the drivers pocket from the 5% credit-card fees. this is a fraud. the customers are paying all of this eventually. if you shut down the system of the back door deals, we could be better off. [inaudible]

i was losing $60 per day. i live 35% less income for eight years. then at plus the recession i went down to pick the% down. we have 200 more cabs on the road this time. any question you have, i can walk you thru the details. supervisor campos: thank you. next speaker. >> i am brad newsom, a medallion holder, a cabdriver for 25 years. i am a green tab. i am personally in favor of a 0% pass-through from the customer. at green cab but we do not

charge anything to the driver. we absorb those costs as part of doing business. we have been in business for 4.5 years. a model those excess were you cannot charge anything and stay in business. this whole thing came about very hastily, and there have been other people sang very public, but i like to think i am a little plug in in the cab industry, and i did not catch wind of this until it was implemented and until i was asked to a meeting to say what my opinion was of all of this. from a customer's point of view, i think it needs to be simple. you need to get in and there should be no question -- the customers all want option of paying with credit cards. they do not want to get into the

cab and the first thing being of little or minor confrontation over whether or not this is acceptable to the cab driver. it should be handled seamlessly, however it is structured. this really needs to go back to the drawing board. he was way too complicated and tied to too many other things. as a driver, and i am an active driver, the last thing i want is for a customer to get in upset and start off from there, and that is what has been happening ever since this came along. i ask you to have this thing send out to the drawing board and reconsidered, and i personally think it should be zero. >> my name is austin peterson appeared i. i wanted to make a point that

drivers with less than an outcome of this 5 percent signed represents 10% because the credit card charges become 5% of the gross income and drivers and the paying half back to the company every day for gas and expenses, so that becomes 10% of their take-home pay. i just wanted to point that out. >> my name is jeff t. i work and drive for yellow cab. we are all independent contractors, but i have options. i can process with yellow of 5 percent signed. i can use my square account at 2.75%, and i have my own merchant account with my own bank. i think we should all work together to try to reduce these credit card fees that we cannot run away from as an industry and work together to keep them as

low as possible. one concrete step we can do is to urge the mta to remove the requirement that cab companies and taxi companies cannot process credit-card companies directly. bringing in this processing requirement we are bringing in a middle man who is increasing the processing fees. i have spoken with management and have been assured if they were able to process credit card fees directly, they would bring down the processing fee to 4% or 4.5%. there are options. i have no problem paying these fees, but try to reduce them and keep them as low as possible. supervisor farrell: you mentioned your square account in your own personal merchant account. are you allowed to use force or a cro use your square account? >

>> we are. we're not prohibited from having our own merchant accounts. supervisor farrell: not to make a commercial for square and they do great work, but you are allowed to use court and do not to pit vipers and if you do not want to? to go it is 2.75% plus a small per transaction fee. >> good morning. and i am attorney at the asian law caucus. i am here on behalf of the caucus to urge the committee to super -- to support supervisor campos' proposed resolution. the mta decision to open up this pandora's box has raised a whole host of legal questions and potential state labor code violations.

as you know, section 11 06 of the transportation code explicitly prohibited taxing companies from passing on the credit card merchant fee to their drivers. section 11 06 have represented an extremely important protection for the drivers who, as it was and already is, struggle to make ends meet. it is disturbing that the codes were waived, though they have not clearly been met. since the waiver went into affect, the caucus has had a number of workers coming to the clinic seeking the system. drivers have reported to us that now not only are they being

charged by% of the total credit card fares as a processing fee, but on top of that there are some companies that have been opened up the project -- merchant bank accounts in the driver's name without the drivers permission and put the credit card bears into these merchant accounts. in order to access and withdraw the credit card beafares, the drivers have occurred additional expenses. as to the last speaker's comments about being able to use other services, we have received reports from drivers that they have not been allowed to use our iphone or other programs in order to process the fees. supervisor campos: the second point about the possible additional cost, that is news to me. i am wondering if you have any idea of how much more we're talking about? to go i do not know, although

there are folks in the room that can help answer that question. supervisor campos: with respect to the first point of what they did, is the caucuses belief that they did not the authority to waive the code? >> we have not taken that initiative. we found it disturbing that the mta could change a provision so lightly without more process, more meetings, more openness and transparency. we found that troubling, but we have not reached a conclusion as to the proprietary of prop. a that gave them the authority or had been interpreted that way. i should go on to say that the state labor code does require employers to cover all necessary expenditures that their employees incur in performing job duties, including credit card processing fees and the cost of the direct deposit

accounts. the fact that a cab company might call their drivers independent contractors is not enough to sidestep -- sidestep the labor protections. and we believe san francisco, who has always been proud of the labor protections, should maintain a clear guidance on that score. mta should be urged to reevaluate and withdraw the waiver, given the potential legal ramifications about how the way -- waiver has played out and we believe they should withdraw the waiver because it makes no sense to allow companies to pass the credit card fees on to drivers who are the least able to carry the additional cost. thank you. supervisor campos: any other member of the public that would like to speak? >> good morning. i feel like i am a criminal the

way things are going. i manage or permits. i did not tell my 225 holders and 270 drivers steps the private sector does their business and we try to provide an adequate service to the public. i take direction from the regulatory body on how i am supposed to operate and i comply with the 100%. we have been in business since 1927. we have the technology and our cab that is called computerized dispatch since the year 2000. these transactions have to go up to a gps satellite, come back down to the phone company, though to the bank, come back to the phone company, back up to the satellite into us. but an extensive charge of

about $14,000 per month for the phone services. i a agree with everyone what they say, but i have to comply with the federal government, and i think so you. there was a 1099k but all taxicab drivers have to pay credit-card fees on all credit card transactions. we are in the process contracting out because we cannot be the merchant to comply with the company called mobile technology. you should be very proud. we are the number one cab company in the united states, putting more people and our calves than any other cab company in the united states. we do $1 million in credit-card transactions per month, and yes, we were paying $40,000 per month and we are not now. the permit holders are another subject. this is a much broader thing

that you really think it is. there are a lot of aspects that running back have company. it is a very tough job. we're auto accident liabilities that you guys do not even understand. we provide jobs to individuals that king got into their own business and create their own livelihood, and you can tall -- talk to all the drivers, in your welcome to come down and see the complaints we have every day of picking up 5000 people by dispatch. we have the largest reached -- wheelchair accessible service in the united states. we take care of disabled vehicle -- disabled people. i am just so upset. the increase in fees was brought up. the medallion holders dictates if you do not pay them a certain amount of money, they will go to another company. there used to be a cap on that,

and it is all gone. there's a lot more to talk about. come down. we did not even address 250,000 calls a of first six months. for seven years we've been asking for taxicab services for the people of sanford says go. it is unheard of to have people wait two hours for a cab. i am just telling you the reports. if you want to come down and see it, you are welcome to. supervisor campos: any other member of the public that would like to speak. please come forward. >> hello. i am the general manager from auto cab. a lot of points of been made,

and there are a lot of misunderstandings. our primary customer is the cabdriver. we provide services to cabdrivers. our job is to support cabdrivers and make sure they make money. what we of design here with the system that the mta has implemented and that we were the first company to deploy in san francisco was the rear seat payment system was away for credit card -- credit cards to be accepted in every taxi in san francisco, and to minimize the impact on the cab company. prior to this, we cannot afford to accept credit cards. yellow accepted credit cards, but the soda calve could not. -- the desota cab could not. every driver pays 5 cents out of

every dollar to except credit cards. the numbers indicate our data from a national data -- there was a report that drivers accepting the credit cards, it their volume goes up and take more passengers come to get better tips. overall revenue increases. i have supplied some of this data to nelson night guard in the past week. you will notice most of the drivers speaking are from companies other than ours and smaller companies. a lot of the smaller companies use to charge 10% illegally. now the drivers are paying 5%. like i said, our drivers were not allowed to take credit cards. we did not accept them before. the other thing is that the drivers -- there was a driver here aware of that mentioned he can use his square, ipad. they are allowed by law to

accept an alternative way to accept credit card. the equipment we put in the taxicab allows the passenger to never release the card. the driver is guaranteed payment of any transaction less than $50, and all the transaction fees are fully tax deductible. the transaction fees are fully tax deductible. the drivers, regardless of the hyperbole, have been declared by the irs to be independent contractors. anything discussing something else a sort of like talking about unicorns, it is not a fact. they are independent contractors. supervisor campos: thank you. any