American Express Co. is working with VeriFone Systems to allow consumers to redeem membership rewards to pay for rides in New York City taxis.

Amex already allows cardholders to use their rewards for direct purchases on Amazon.com and Ticketmaster. But using rewards points to pay in taxis is a new concept, says Leslie Berland, senior vice president of digital partnerships and development at Amex.

"Card members in general are looking for ways to use those points in every day purchase with small price points," Berland says. "The opportunities are endless."

The relationship builds on VeriFone's ongoing initiatives with New York taxis. The terminal maker's devices are in more than 7,000 cabs throughout New York City and process more than 200,000 taxi ride payments per day.

VeriFone in-taxi payment terminals will accept rewards points in real-time the same way they accept credit card payments. Riders that chose to pay with credit will swipe their cards like usual at the end of a ride and add a tip. Amex cardholders will then be prompted to use points—if they have enough—for their fare.

Cardholders will see how many points they need before the payment is processed. The cardholder can also choose not to redeem with rewards, and in that case the payment will be processed as credit.

"We're making it easy and simple and straightforward for [consumers] to be able to engage with their points," says David Wolf, vice president of global product and business development at Amex. "New York City taxi payment screens are very similar to other point of sale terminals in millions of merchants around the world," so consumers will be familiar with the process, Wolf says.

VeriFone has experimented with many different ways to handle payments in taxis. In August, VeriFone launched Way2Ride, a sound-based mobile payment app powered by Zoosh. Hailo, an e-hail app provider, integrated its service with VeriFone in September. VeriFone also works with street-hail livery cars.

New York is a tough market for transit payments. But earlier this year a county judge in Manhattan dismissed a lawsuit that challenged e-hailing and taxi payment apps, allowing several startups, including Uber, to begin testing.

Berland says Amex is currently pursuing more verticals, including other physical retail or dining experiences, to integrate rewards redemption.

But bringing rewards to the physical point of sale has proved difficult for some. Citigroup's 2G card developed by Dynamics, which let users pay with rewards at the point of sale, never got past pilot. However, Dynamics recently partnered with Key Bank to offer a game-based rewards program.

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