A tale of two taxis: Navigating the UK's evolving transport scene

6:00 AM: A Story of Two Businesses

 

Sarah runs a five-driver black cab service in Manchester. David owns a small airport transport company in Birmingham and went digital two years ago. They both checked driver availability and bookings on a Tuesday morning, but that’s where the similarities end.

 

Sarah starts her day with a series of phone calls. Three drivers called to confirm their shifts, one is sick again, and two regular customers booked afternoon pickups. She writes notes, checks her diary, and hopes she hasn't double-booked. Her drivers have financial issues. Vehicle 3's card reader is down, thus they've lost two fares due to cash shortages.

 

David's morning feels unique. His dispatch system updated overnight with driver availability, weather alerts indicated possible flight delays at Birmingham Airport, and his payment dashboard shows that yesterday's settlements are already in his bank account.  His drivers got automatic alerts for schedule changes, and customer bookings were processed through his integrated platform with payment pre-authorised.

 

The difference isn't just luck, it's about the strategic decisions made in response to industry pressures that impact every taxi operator in the UK.

 

The reality of the driver shortage: More than just London's headlines

London's loss of 8,000 drivers since 2013 is making waves, but the driver shortage impacts operators across the country in various ways. Rural operators are dealing with older driver demographics, while urban operators are up against competition from gig economy platforms that provide more flexible work options.

 

Sarah encounters typical recruitment issues. Prospective drivers see the £10,000+ annual running costs, the 60+ hour weeks required to make ends meet, and the 15% yearly rise in passenger abuse reports. They typically choose delivery driving or similar gig jobs instead.

 

David adopted an alternative method. He rebranded his company as a tech-enabled service provider, not just advertising driver positions. His drivers utilise mobile POS systems that accept contactless cards and QR code payments, eliminating the hassle of cash handling that can discourage younger passengers and drivers alike. Instant settlements enable faster payments for drivers, and professional payment receipts reduce disputes with passengers.

 

David explains that technology doesn't take the place of good drivers; instead, it enhances their efficiency and professionalism. It draws in stronger candidates.

 

The payment revolution changing what customers expect

Payment preferences are changing not only with different generations but also based on location and circumstances. London is experiencing significant changes, as two-thirds of residents have shifted their payment habits, leaving just 8% who still prefer cash. Even in smaller cities, it's clear: 51% of UK consumers have altered their payment habits in the last year.

 

Sarah found this out the hard way when a corporate client cancelled their monthly contract.  "She remembers them saying our payment process was too complicated for their expense reporting." Drivers needed to call the office with their card details, then they processed payments manually, and receipts were written by hand. That was pretty embarrassing.

 

The corporate market really needs advanced payment processing. Companies like Gett have created business models focused on corporate clients, offering centralised billing, automatic expense integration, and detailed reporting that traditional operators struggle to provide.

 

David's solution included adding pay by link functionality to his mobile payment systems.  Corporate clients now get professional invoices that include secure payment links. Transactions are automatically categorised for expenses, and detailed reports are generated right away.  "We shifted from losing corporate accounts to actually winning them from our competitors," he says.

 

The technology adoption paradox: Balancing complexity and necessity

Lots of operators feel the same technology anxiety as Sarah. "Every month, there's a new system we need to adopt," she says.  Mobile POS, online payment systems, dispatch software, tracking apps, how far does it go? "Who has the time to learn everything?"

 

This feeling highlights a bigger issue in the industry: many think that adopting technology means completely transforming the business, which demands a lot of investment and technical know-how.

 

It's a more complex situation. David took a step-by-step approach. He began using a mobile POS solution, such as the One app by Wonderful, transforming his drivers' smartphones into payment terminals without needing new hardware. The flat-fee pricing model eliminated any upfront costs, and the offline feature tackled his biggest worry about signal issues in airport parking lots.

 

“I didn’t turn into a tech company,” David stresses. "I started a taxi company that leverages technology to tackle real issues."

 

The unseen costs of staying put

Sarah is starting to see the hidden costs of her resistance to change. It's not just about the customers who want digital payments; there are daily operational inefficiencies that add up too.

 

Her manual booking system often results in scheduling clashes, leading to lengthy phone calls to resolve them. Drivers lose valuable time dealing with payment issues, faulty card machines, customers without cash, and disputes over change. Slow settlements from her traditional payment processor create cash flow shortfalls, forcing her to rely more heavily on her overdraft.

 

Her lack of detailed payment data makes it really tough to acquire corporate clients. Today’s businesses look for integration with expense management systems, automated receipt generation, and clear billing, things that manual processes just can’t provide.

 

The open banking opportunity: More than just lower fees

Payment processing companies often highlight cost savings, but the true value of innovations like open banking payments is in transforming operations. Traditional card processing fees of 1.5-3% per transaction can really add up, but the 2-3 day settlement delay poses bigger issues for cash-intensive businesses.

 

Open banking payments provide instant bank-to-bank transfers, completely removing settlement delays. For operators like David, this allows drivers to get paid right after their shifts, covers vehicle expenses without cash flow issues, and significantly lowers working capital needs.

 

Wonderful's open banking solution shows this advantage by offering instant settlements and lower transaction costs. The technology does more than just handle payments; it provides detailed transaction data that enhances business intelligence, automates reconciliation, and simplifies accounting processes.

 

The competitive landscape: Working together vs. competing

Not all operators have been impacted equally by the rise of app-based platforms. Businesses focused on niche markets like airport transfers, corporate clients, and wheelchair-accessible transport often leverage their local expertise and specialised services to build strong competitive advantages.

 

David's airport transfer business actually gains from app-based competition. "He explains that Uber and Bolt have set the expectation for customers to receive professional, tech-enabled service. They also left gaps we can fill, like corporate billing, advance reservations, and specialised vehicles for group travel."

 

His QR pay solution lets passengers pay before their journey starts, removing that awkward moment of transaction while luggage is being loaded. Business travellers are drawn to the professional receipts and expense integration features because they make expense reporting effortless.

 

Industry pressures beyond payments

Regulatory and Tax Maze

Beyond payments, both operators confront growing regulatory complexity. Transport for London's 57-page Action Plan shows how compliance requirements are growing as authorities enforce multiple vehicle standards and emissions restrictions. Incompatible licensing regulations prevent Sarah from expanding into Liverpool.

 

The VAT decision is more dangerous. If the Supreme Court demands 20% VAT on all private hire fares in July 2025, Sarah must decide whether to absorb the expense and lose profits or pass it on and lose price-sensitive consumers. This affects almost every operator since 78% of UK rides are outside London.

The EV Transition Problem

60% of London's cabs are zero-emission, but the move strains cash flow. Although the £6,000 Plug-in Taxi Grant helps, operators still face greater upfront costs and charging infrastructure issues. Not all of Sarah's drivers' homes have charging stations.

 

David is practical: "Before committing the fleet, we're piloting one EV to determine operational consequences. Planning the change is better than forcing it."

 

Regulatory, financial, and environmental concerns make payment issues worse, making technology adoption survival-critical for UK cab firms.

 

Excited for what's next: The need for integration

Operators that combine traditional and contemporary skills will lead the UK taxi sector. The goal is to improve reliability and local expertise with the digital tools clients demand, not history over innovation.

 

Sarah is learning. She's considering a payment system upgrade after losing another corporate client last week. “I’m not looking to turn into Uber,” she explains. "I want to serve my customers well."

 

David says, "Focus on one problem and tackle it effectively." They focused on payment processing. Once that worked, they integrated booking and streamlined dispatch. David's motto: “Technology should enhance your current business, not take its place.”

 

Explore what’s next for UK taxi and airport transfers in 2025: trends, payment options and challenges, to see how the industry is evolving and what that means for operators like Sarah and David.