Very interesting development. You can already pay by card in NYC so that functionality isn't going to be anything exciting for riders.
However, the opportunity for apps is huge- right now there's just a dumb TV terminal in the cab that plays the same horrible videos over and over. I've been working on a taxi-based app (http://www.taxono.my/ - I'll stop mentioning it in every post I make soon) that would go fantastically into a Square-attached tablet. But I'm not sure what they'll allow and what they won't, at this point. I imagine there might be a hefty fee involved...
Sincere good luck. I was involved in developing one of the first NY cab video + credit card hardware designs in the early 00s. We actually built it into an real yellow cab that, entertainingly, I got park in my driveway and drive around during the venture (on loan from one of the largest fleet owners).
We combined 16:9 screen, ATM keys, tap-and-go card reader, and traditional card stripe swipe, into a self contained unit mounted into the safety panel.
You could mute it (of course). It played a safety PSA, then let you figuratively "change the channel" to show you up-to-date video clips per your interest -- sports, news, weather, broadway promos, etc. -- or a GPS map of the cab's location in the city. A key innovation let us update the videos on the fly in all the cabs without requiring a SD card swap or a cellular data charge.
Great backers, but project got killed in a TLC political maneuver. It's a challenging industry to try to break into and try to change. The devices you see deployed in Vegas, Chicago, and NYC, are mostly hamstrung in various ways that often cost the cabbies or annoy riders. It's disappointing to see, but if someone can muster both the tech and the political clout, it's still ripe for disruption.
What's in cabs today is about 4x as expensive, bulkier, less durable, the user has less control, and the video content doesn't get refreshed on the fly. Our business plan offered a lower processing fee, paid into a health fund for cabbies, and had other financial bonuses to fleets, cabbies, and the city.
There were about a half dozen "competing" systems (hardware and business model) at the time. A couple of the others got adopted and their progeny are what you see in cabs in NYC now. We were backed by some of the best known finance, ad, and government money, but the decision was neither technical nor based on cost to cab owners or even cost to fleets.
As I said, I hope Square can disrupt that situation.
Concur with this... most cabs actually have two card sliders (one under the touch screen & one attached to the barrier glass), do they really need a third piece of hardware?
Why isn't the TLC just negotiating for lower fees from the payment processors? Perhaps I'm missing something...
[Sidenote]: LOVE using Google Wallet on my Galaxy Nexus to pay for cabs (they're all equipped with PayPass), very much hoping that Apple will jump on NFC, making it ubiquitous. If there is an opportunity for apps, my guess is that we will see more development around payments via NFC (untog's app would integrate nicely with some payment info). Carrying around cards will hopefully seem old school, similar to how paper checks are now (still need them, but they won't go extinct too quickly).
Last time I was in New York, the cab driver who gave me a lift from the airport mentioned to me the fee charged by the processing system they currently use. I don't remember the exact number he gave, but I remember it sounded very high to me. If Square charges cab drivers the same price they charge me, this could be a very good thing for NYC cabbies.
After offering to tip an extra 5% a few times and getting the fish eye, I cynically thought "Oh, wait, he just doesn't want a record of this transaction." The most plausible reasons for that are theft or tax fraud. Sure enough, the IRS's public audit techniques guide for taxi drivers (Google it) suggests that tax fraud is virtually universal: e.g. sample audits on 600 drivers in a city found 600 under payers with an average adjustment of $6,000 (i.e. they understated income by probably $25k+), due to pervasively inaccurate records and, the IRS strongly hints, a culture of intentional avoidance of taxes.
This sort of reminds me of the massive pizza delivery discovered in the embezzlement business that someone mentioned earlier when a shop in Ohio installed a PoS system to track transactions.
In Australia, there are about three monopolies left, one is the taxi payment system, Cabcharge. It takes a 10% commission from all transactions. They have been fined over $15 million for breaching of their market powers.
A large number of taxi owners / drivers are trying to offer better services through modern tech such as guaranteed books via phone apps and different payment systems. Due to regulatory capture the owners and drivers are been hassled.
Currently, if you install non-cabcharge payment facilities you have trouble with your insurance. Yes, the same people control the booking system, insurance and most other 'operational' aspects of the Sydney taxi industry.
In Chicago at least it's common for a cab driver to claim that the credit card machine is not working in an attempt to force people to pay cash. I couldn't tell you how many arguments I've gotten into with drivers over this.
Fortunately, the city requires the vast majority of cabs to be able to take credit to be allowed to pick up a fare. It's amazing how many times reminding the driver about this has made the machine start working...
Square is definitely in use in some cabs in Chicago already. In the past month, I have paid for two trips using Square. Both taxis seemed to have working credit card terminals, but the drivers instructed me to not use them. So evidently Square is preferable in at least some way. As a customer I certainly appreciate being able to receive an electronic receipt.
That seems likely, but I don't have evidence either way. In one case the transaction came through as what I presume was the driver's name, the other as "SQ *TAXI OF CHICAGO".
Still, the that fact that out of three recent cab rides, the two trips involving credit cards were both paid for using Square is an impressive sign.
As noted by others in this thread, drivers here regularly try to use the "machine is broken" tactic, despite the law. If Square's existence makes taking credit cards sufficiently easier for drivers then cab riders will directly benefit.
Last July I took a taxi in Chicago and the driver was using a Square card reader. I take a few taxis every week in various cities, always paying by credit card (so it can be expensed), and it was the first and only time I've seen a taxi driver using Square.
I asked him about it and he said it was personal and he had not seen any other drivers using one. It's non-sensical and as an earlier poster noted, also a bit of a political issue, since the existing terminals force the driver to pay 6% versus 2.75%, with no ad revenue sharing. I talk to the drivers here in Boston quite often, and they have no choice on the terminals they have in the cars. One would think that if drivers are forced to accept credit cards, they should at least have the option of choosing a vendor.
Basically, one of the requirements to operate a Chicago cab* on any given day is to be able to accept credit cards. Because of this, if the driver flat out refuses to take your credit card they're not eligible for the fare. If you're really having problems with a driver I suggest calling 311 (or threatening to at least). I've never had to do this, but when I called to formally complain about a taxi the first question they asked is "are you in the cab?" so they must have some sort of action plan for that.
*I believe this only applies to fleet cabs (not independents), but that's virtually all of them anyway.
Note: 2am so I'm not going to look up the specifics right now, but if you want to know more, feel free to email me (in my profile).
I'm much more willing to catch a cab in NYC than I am in Chicago or Milwaukee, because I usually don't carry enough cash for a ride and I'm usually not in the mood to squabble with the driver. I swear, I can usually walk to my destination in the time it takes to watch a Chicago cabbie pantomime with the card reader in an effort to convince me it's broken.
Income tax + payroll taxes + state income tax can easily total 40 percent, so a 12 point bump in tips is not a big disincentive to tax avoidance.
And in NYC they have to pay city income tax on top of all that.
(If the cabbie incorporates and maintains a business bank account and payrolls himself and files taxes correctly, he'll only be paying 15-25% on some fares. I'd be surprised if any significant number of cabbies bothered with this.)
Livery cars take credit cards. The article explains that lets livery cars cost more than cabs, and that is why cabs are winning. Also, livery cars generally don't cost more than cabs for common trips like airport, so I take that whole article with the usual grain of salt NYT requires for its writing.
Yup - the three default options for tip are 20/25/30%, so people are tipping a lot more than they would in cash because they can just hit one of those buttons and not have to calculate a tip in their head.
This is useless when every cab driver that picks you up will just claim the machine is broken. This is not even just me complaining. I believe the market is going to be difficult to break due to cabbie habits.
I've lived in New York for about a year and a half and up until this month, I was taking cabs at least twice a day. I've had them pull the broken credit card machine excuse maybe 3 or 4 times. Obviously anecdotal, but it was so infrequent as to be a complete non-issue, and with the number of cabs on the road, it never actually caused me any problems.
In Chicago cabs are essentially required to accept credit cards if they want to pick up a fare (there's an exception for the handful of independent cab's in the city).
I don't take cabs all that often (4-5 times a month) but I have had a driver resist taking the credit card at least 20% of the time, and within that subset well over half use the 'broken machine' excuse.
Of course it always seems to work once I tell them "it's credit, or I don't pay"...
The machines are very sensitive to vapors offgassed by green dyes, but it is a psychosomatic allergy, much like RSI. (That's why cabs are yellow in color.) If you politely explain to the driver (within earshot of the machine) that you do not have cash, the machine will recover temporarily.
I wonder if they'll be using the same checkout devices as everwhere else. From what I've seen, the Square device is kind of flimsy looking and difficult to use. The device in a taxi cab needs to be able to handle a lot of abuse.
You assume the existing system isn't laden with corruption and unrealistic fees. What's likely happened is that Square recognizes it can undercut some other (company|companies) too cozy in their operations and steal their lunch.
Otherwise, adoption and success would fare poorly - Square don't sound like they're desperate or stupid.