Two companies offer toll billing services to rental car firms in US

The Chicago Tribune writes about a business called Platepass which provides toll collection services primarily to rental car firms, whose customers may not know how to interact with fully electronic free flow toll roads.  It has been around since 2006 and is used by Hertz and Advantage rental cars in the USA.   A competitor called Highway Toll Administration (since 2002) is used by Avis, Alamo and Enterprise. 

The system works by offering rental car customers an option to pay for tolls electronically.  It means that no rental car vehicles become violators, but instead Platepass chases up the debt, usually paid through the credit card used for the car hire.

It charges an administration fee of US$2.95 per day for rental car customers, effectively meaning it is only worthwhile if one is using several toll roads per day.  The maximum is $14.75 per month, meaning a two month hire could cost $29.50, without actually paying a cent for a toll road.

The idea is to be convenient.  However, it appears that some customers are being signed up for the Platepass without being aware of it, and some are paying cash at conventional toll booths and finding out they are being billed twice.  Certainly the fee structure makes it more expensive than paying direct, but few users of a rental car know how to contact the toll road company and make a payment by phone.  It takes considerable time to work that out.

However, it really ought to be transparent to those renting.  Either it is clear that all tolls will be through this system when renting, or those renting can opt to pay direct and face the considerable fines involved if they do not do so (that being the real saving of the administration fee).

It is good to see businesses emerge to deal with this obvious issue, and for them to hopefully extend across lease vehicles or even maybe have consumer products for when people borrow cars off others (perhaps with a smartphone app to activate an account).   Yet it is important that people know that it exists and what they face paying.

Meanwhile, this business is undoubtedly quite a lucrative one for those in it.

So what about rental cars and tolls?

It's one of those neglected issues when road pricing comes along, which is to consider what happens when a hirer of a rental car uses an electronic free flow tolling facility and doesn't pay.  The obvious answer may be that the rental car firm should be liable, as it would be for any parking offences, but it wasn't obvious in Harris County, Texas.

The Houston Chronicle reports on a settlement between Enterprise Rent-A-Car and the Harris County Toll Road Authority of US$1.15 million in unpaid tolls and fines.  The problem being a combination of Texas law and the rental contract.  Rental companies could provide details of the hirer within 30 days to the Authority and make it the Authority's responsibility to pursue the hirer, which of course proved to be problematic.

You see elsewhere most rental car firms take credit card details that they retain to cover any such fines or fees.  However, this law encourages the rental car firm to pass on the responsibility, so that it doesn't face either the administrative cost of processing the payment or the bad customer relations in charging it.  Enterprise thought it could avoid responsibility, but eventually relented.

Enterprise now does exactly what I described above, which of course it should have done so in the first place had it bothered to see business practice elsewhere.

Enterprise now works with a vendor that ensures all of its roughly 1 million vehicles' license plates nationwide are listed in an account. The vendor pays the county when HCTRA's toll cameras pick up a plate on that list. The vendor then charges the tolls, with a fee, to the renter's credit card, said company spokeswoman Laura Bryant.

Bryant said the process is working, not only for tolls, but for red-light camera fines and parking tickets, too.

"That doesn't mean the process is perfect, but we're doing everything we can to make it as good as it can be," she said. "This has been a huge learning curve for everybody."

For a twentieth of the cost of this settlement, Enterprise could have got some consultants in (!) to develop the business solution to this problem based on best practice elsewhere.

Avis apparently settled for US$190,000 four years ago, and Hertz has toll tags installed in its Texas based vehicles effectively enabling it to be an easy part of the toll payment transaction at the end of the hire.  

Conclusion

If the law makes it clear that vehicle owners are responsible for tolls, then it is up to rental car firms to ensure that their contractual and payment solutions enable them to pass on these costs.  Toll tags in areas with extensive toll networks should enable toll transactions to be looked up and added to accounts, and the use of credit cards can ensure any residual transactions can be paid for.  With electronic free flow tolling increasing in reach and scope, it will become increasingly important for rental vehicle and vehicle leasing firms to find ways to ensure that liabilities for such charges can be recovered from those who initiate them.

News shorts - Australia, Canada, USA

Australia

The New South Wales Government is facing continued pressure on budgets, like many governments, and so according to the Daily Telegraph (Australia) appears to be pushing for another PPP toll road in the form of the F3-M2 motorway.  It is expected the new highway will be tolled and entirely privately financed and owned.   The F3 is the Sydney to Newcastle freeway that currently ends in the northern suburbs, the M2 is a private toll road (managed by TransUrban) that forms the northwest to north-central connection of the “Sydney orbital” motorway network connecting the M7 toll road (which effectively forms the western leg of a “Sydney bypass”) to the freeways at the northern end of the Sydney Harbour Crossings.   The M2 is a fully electronic free flow toll road as of January 2012.  The F3 to M2 link would complete the Sydney bypass by providing a full motorway standard ring route from the north to the south, and so is considered to be a strategically critical link in Sydney’s motorway network.  The Government is apparently having talks with TransUrban about the project, although   Other projects under consideration include widening the M5 motorway (the toll road running south-west from the airport to the southern outskirts of Sydney) and the M4 east (an expensive extension from the major western motorway to bypass inner city suburbs to connect to the downtown Western distributor freeway).

Calgary

The Calgary Herald reports that the University of Calgary School of Public Policy has published a paper advocating that users be charged directly to fund infrastructure including roads.  Although it will be “phenomenally difficult” politically, it needs to be undertaken in an open and transparent way, with acknowledgement that existing taxes are incapable of stretching to pay for maintenance and renewal of networks.

The newspaper reports:

Although tolls exist throughout the United States, on Toronto’s 407 Highway and the Vancouver area’s Golden Ears Bridge, it’s a no-go issue in much of Canadian politics. It’s so hot that when a Transport Canada call for proposals for a study on road pricing made headlines on the eve of the 2008 election, the Harper government’s transportation minister swiftly quashed that idea.

Similarly there is little enthusiasm with the current Alberta Provincial Government for tolls:

Transportation Minister Ric McIver said he won’t go near the idea of user fees on the big-city ring roads. He’ll entertain the possibility of tolls for the fast-tracked twinning of Highway 63, but only as part of his promise to “look at all the options,”

The Calgary Mayor, Naheed Nenshi also ruled out congestion pricing on existing roads.  Brian Flemming, from the School of Public Policy says the reasons to consider user pays are:

•  The need to find a gap in funding following the end of “stimulus spending”, which can also leverage private capital;
•  Increased fuel efficiency and alternative fuels diminishing revenues from fuel tax.

 However, this doesn’t mean just a few toll roads, he is pushing for proper network road pricing, and that is a debate that Canada hasn’t started to have yet.

“This means something far beyond mere traditional tolling of roads and bridges. It means creating a system whereby those who use infrastructure will electronically have to pay small and sophisticated fees or this use.”

That means a debate about replacing existing taxes, the debate that has started to emerge in the US and Australia, and one that could well do with being catalysed in Canada.

Florida

What about rental cars? An article by Larry Elkin, President of the Palisades Hudson Financial Group, sings the praises of a Florida state policy to convert all toll roads into fully electronic free flow operations. I can agree with all that.  However, his concern is how to deal with rental cars when those hiring fail to pay for a toll road.   He wants regulations for rental car companies to stop them charging high surcharges for passing on toll fees.   I disagree.   Experience elsewhere suggests a range of alternative options.  For a start, toll roads are usually well signposted, so it shouldn't be a surprise to motorists.  In Australia, rental car hirers in Sydney (which has many such toll roads) receive a leaflet explaining how to pay electronic free flow tolls online or by phone.   In addition, it is perfectly feasible for rental car firms to install tags in vehicles so that tolls can be charged to a vehicle, and then charged to the hirer at the end of the hire, or to have accounts based on number plates which also enable the same thing.   Given the rental car industry is competitive, with low barriers to entry, it seems more likely that suitable solutions will be developed by providers working with toll operators than some sort of government regulation.

Indiana

Debate over the privatisation of the Indiana Toll Road continues.  This time in the Evansville Courier and Press (Indiana), the Press Secretary of Indiana's Governor, Mitch Daniels, counters an article by a journalism lecturer.   She claims the sale helped fix the state's finances and provided a structure within which tolls could be increased to allow the road to be upgraded.  The view she is countering is that the lease meant revenue that would have come to the state would be going to a foreign private company.   Interesting the debates in a country sometimes held up to be the bastion of free market capitalism.