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VISA Singapore has abandoned a 30-month cold war with cab operators over the surcharge levied on customers paying for taxi rides on Visa-issued cards, and will reinstate card-payment service on ComfortDelGro cabs from the start of next year.
But this comes following a wave of tie-ups between taxi-booking apps and Visa - which profits from greater adoption of cashless payment - in the last few years that has already led to big leaps in Visa transactions for taxi-ride payments in Singapore. The shift has made this impasse between Visa and Singapore's largest cab operator far less relevant to Visa, which commands the world's largest electronic payments network. More than seven million cards in Singapore are using Visa's payment network.
Ooi Huey Tyng, Visa country manager for Singapore and Brunei, told The Business Times on Tuesday that the company has logged close to 700,000 Visa transactions per month made on third party taxi booking apps - and all with no 10 per cent surcharge.
When Visa withdrew acceptance from all Singapore taxi operators in the middle of 2013, there was just an average of 140,000 Visa transactions per month for taxi payments. One in a 100 rides on ComfortDelGro cabs were paid for using Visa cards, then.
Within 12 months, Visa transactions on third party booking apps including Uber and GrabTaxi have jumped by about eight times, to today's levels.
"We believe we're just seeing the tip of the iceberg," said Ms Ooi.
She noted that Visa's latest move is meant to cater to business travellers and tourists, who would still need that option of paying with their credit cards. The majority of transactions made on third-party booking apps currently are domestic transactions, data from Visa showed.
As it is, a large number of Singaporean customers have always shied from paying the 10 per cent surcharge. Before Visa withdrew acceptance from all Singapore taxi operators in 2013, almost half of the Visa transactions in cabs were international transactions. Still, Visa viewed the surcharge - introduced about ten years ago - as a barrier to cashless adoption in Singapore, particularly before the taxi-booking apps came about. Singapore is not alone in this; credit-card payments for cab rides in Australia also come with a surcharge.
"We are very disappointed that we've not been able to remove or reduce the 10 per cent surcharge, after a longstanding discussion with ComfortDelGro," said Ms Ooi. "We continue to oppose the practice of surcharging."
Visa Singapore is open to offering this to the other cab operators later, and will eventually offer Visa payWave contactless payments for payments in Comfort taxis.
As it is, commuters can still pay using cards issued by MasterCard and Amex. And there are signs that ComfortDelGro and MasterCard have cosied up. In October this year, ComfortDelGro said it has tied up with MasterCard to offer digital payment on its booking app. Customers would have to link their MasterCard cards to a digital wallet, and then pair that account to the taxi booking app.
Visa payments are currently not available on Comfort's booking app.
ComfortDelGro did not comment directly when asked why the surcharge should remain. But it confirmed the latest development, and said the full roll-out across the entire fleet of 17,000 taxis will take about three months from Jan 1, 2016.
The cab company had earlier said in 2013 that the fee was to cover costs needed to continually invest and maintain the cashless payment terminals and systems, as well as to pay bank fees and telco charges. Visa earns a fee from banks that issued the cards on which payments are put.
An earlier version of the story said the withdrawal of service was for 18 months. It should be 30 months.