What does Merchant of Record mean, and should you be one?
A version of this article appeared in the June edition of the Private Hire and Taxi Magazine (PHTM)
Since customers now demand the convenience of paying for taxi journeys by card, taxi fleets are having to grapple with the complicated world of card payment processing. Passengers want to know that they can pay in any of your vehicles using a secure Chip & PIN device, including options for contactless, Google Pay and Apple Pay.
When setting up a fleet’s card payment facility, some fleet operators consider acting as the Merchant of Record (MoR) for the fleet’s drivers. Under this model, the fleet company is authorised by a financial institution to process card transactions, and its name appears on consumers’ credit card statements.
The MoR is responsible for maintaining a merchant account, processing payments, and managing card processing fees. The MoR must ensure compliance with PCI-DSS requirements, stay up to date on relevant laws and regulations, and is liable for chargebacks.
The accrued funds from all successful transactions are paid in batches to the MoR (the fleet company). It is the responsibility of the fleet operator to calculate all amounts owed to individual drivers, usually by cross-referencing transaction identifiers with some other system (e.g. data dispatch system). This can be a complex and time-consuming process. Refunds and chargebacks must be accounted for, and processing charges deducted, which can differ depending on the card type (credit, debit or prepaid), scheme (Visa, Mastercard, American Express etc.), issuing country and account type (business or commercial).
Finally, the fleet must make payments to individual drivers, usually via bank payment e.g. BACS or Faster Payments, adding cost to the process.
If this sounds like too much hassle, risk and cost, you’ll be glad to know there’s a better option for your fleet. CabCard Services has been making card payments simple for fleet operators for over a decade. CabCard manages all the complexity of dealing with card schemes and regulators, and makes payment directly to your drivers. Even better, our processing rate is usually just 1% or less for taxi fleets, and we make it easy to get set up with an option of no upfront cost for new payment hardware. We will be at the PHTM Expo and look forward to discussing your fleet’s card payment needs.