Taxi levy capped at five per cent

The service fee levied by Cabcharge and other taxi payment processors in Victoria will be halved to five per cent of the fare, under reforms endorsed by the state government yesterday.

The Victorian Government released its response to the recommendations of the Taxi Industry Inquiry run by Allan Fels.

It affirmed that the 10 per cent service fee levied on the processing of electronic payments should be brought under regulation "and set at a level that better reflects the resource costs of providing the service."

The state government endorsed Fels' views that this fee be set at five per cent of transaction value as a maximum amount. This fee will also be subject to a further evaluation by the Essential Services Commission.

Even at this level the service fee would be more than five times the merchant fee paid by Cabcharge to National Australia Bank.

This step may cost all taxi payment providers, including Cabcharge, A$15 million a year.

Cabcharge said in a statement that it would study the government's response to the Taxi Industry Inquiry.