The ways riders can pay–and play–inside New York taxicabs are expanding.

The New York City Taxi and Limousine Commission on March 1 green-lighted a new pilot during which riders getting into one of 30 participating taxis for the first time may pay using Apple Inc. iPads and iPhones equipped with Square Inc.’s mobile-payment card-swipe device and application.

Riders also will get to try out various new interactive services in other cabs from VeriFone Systems Inc. and Creative Mobile Technologies Inc., which have long-term contracts to provide payments in New York city taxis, a commission spokesperson tells PaymentsSource. VeriFone and Creative Mobile will run pilots in 30 cabs each.

The year-long pilot begins this spring and runs through February 2013.

Riders using the Square iPad app may swipe their credit cards at any time during the ride and opt to receive a receipt by text or email, a Square spokesperson confirms.

Square’s iPad package eventually will include entertainment and games for riders, and the package will cost participating cab drivers $350, Square says. Square is recruiting drivers to participate in the trial.

Many taxi drivers already are using Square, the spokesperson notes.

“Taxi drivers are among our most active and loyal users, with thousands of drivers around the country choosing Square as a more simple, cost-effective way to get paid for their work,” he says.

In its pricing scheme, Square charges merchants 2.75% of the sale for card-present transactions and 3.5% plus 15 cents for each payment where a card is not swiped.

New York cab drivers reportedly pay about 5% of each fare to process transactions through the city’s existing fare-payment systems.

VeriFone also won permission from the commission to test new “value-added” interactive payment and entertainment services in city cabs during the pilot, a VeriFone spokesperson tells PaymentsSource. Planned services likely will include adding the opportunity to buy lottery tickets inside taxis (see story). Riders also may get discounts for restaurants and events while enroute to venues and be able to order and pay for items online while riding in a cab, the spokesperson says.

Using a tablet to pay for cab rides is not a new feature, he notes. VeriFone already is testing that option in 50 New York cabs. It also is working on applications that would connect to social media, the spokesperson says, declining to provide further specifics.

As for welcoming Square’s participation as another payments provider in New York cabs, VeriFone was circumspect.

“We’re waiting to see what exactly (Square) is delivering in the way of an integrated system and how they're going to provide additional services for the same fee structure they use with all their other customers,” the VeriFone spokesperson says.

Executives at Creative Mobile Technologies were unavailable to comment on the services they plan to test during the pilot.

New York’s taxi commission chairman, David Yassky, indicated the city is taking concerns about security surrounding new mobile devices seriously.

“The iPads and iPhones which will be used in the Square pilot will be more firmly secured in the cabs than any of the driver’s other possessions, so we don’t think there is a safety concern,” Passkey said during the commission’s announcement about the trial.

“The fact is, one of the most effective safety measures the [Taxi and Limousine Commission] has taken was mandating credit card readers so that drivers weren’t required to carry as much cash,” Passkey added. “Any innovation that increases the likelihood that passengers will pay with plastic serves to reduce the risk of theft.”

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