Taxicab drivers and their passengers will soon be able to test new mobile hailing and payment systems, following the launch of an e-hailing pilot program and updates to New York Citys regulations for in-car payment terminals.
The new technologies include e-hailing and mobile payments apps from providers Uber and Hailo. The marketplace has also opened up to allow more vendors to provide in-car payments systems to taxi operators in the Big Apple.
The New York City Taxi and Limousine Commission cleared a legal hurdle last week in its effort to launch an e-hail pilot program after a county judge in Manhattan dismissed a lawsuit that challenged the effort to allow consumers to use smartphone apps to request a taxi ride and pay their fare.
The TLC announced Friday that Uber Technologies is the first e-hail app vendor to be approved, marking the start of the 12-month pilot program. The initiative was to begin in February, but was delayed after trade groups representing the city's livery cab drivers sued to stop it, claiming the technology disrupts the balance between town car drivers, who exclusively serve prearranged rides, and yellow cab drivers, which are allowed to accept only street hails.
Meanwhile, contracts with the TLC that gave VeriFone and Creative Mobile Technologies exclusive rights to provide card payment processing and hardware to the more than 13,000 taxis in New York expired on April 22. To replace it, the TLC has established new guidelines to regulate and approve payments vendors.
Rather than performing a procurement process to award semi-exclusive contracts to vendors, the new policy will allow any vendor that meets the TLCs requirements to apply for inclusion on a list of authorized providers. Taxicab operators will be able to obtain payments services from any of the vendors on the list. So far, New York City-based CMT and San Jose, Calif.-based VeriFone remain the only vendors approved to provide payments technologies in cabs. The longstanding duopoly has led to litigation between the two vendors over advertising services that they provide to cab owners.
The two taxi payment technology initiatives are complementary in some respects, as the TLCs rules for the e-hail program require app developers to integrate with the in-car systems and vice versa. With the e-hail lawsuit resolved, the TLC has resumed testing and approving mobile app developers for the pilot program.
In addition to Uber, e-hail apps developed by Flywheel, Hailo and Taxi Magic are currently in various stages of the TLCs approval process and are expected to go live in a few weeks. London-based Hailo has already signed on 5,000 taxi drivers to use its e-hail service, CEO Jay Bregman told PaymentsSource in an April 24 interview. The platform includes both a consumer-facing smartphone app and an accompanying portal for drivers that provides traffic data, communications tools and other features in addition to the e-hail function.
On Friday, Hailo announced a private beta launch of its e-hailing app. The mobile hailing technology makes taxi drivers more efficient because it better connects them with passengers, says Bregman, who estimates that the typical New York taxi driver spends 40% of his or her shift looking for passengers and adds that drivers in other cities have seen their fares increase 30% by using the app.
It puts more cabs on the street without putting more cabs on the street, he says.
The Hailo test is happening prior to the company being named an approved vendor. A spokesperson for the TLC said the activity is outside of the official pilot program and drivers that use the app are subject to enforcement action for using an unapproved vendor, but added that as of Monday no drivers have been sanctioned yet.
Uber is the only approved E-Hail Pilot Program Participant. Hailo has not been approved for participation in the E-Hail Pilot Program. Use of Hailo app may result in summons, suspension, or possible revocation of TLC license, reads an industry notice the TLC published late Monday.
Hailo Network USA, Inc. has not been authorized to either provide or beta test these services, the notice adds.
Representatives from Hailo did not respond to a request for comment on Monday.
Hailo is not a payments processor, but rather partners with processors, including Braintree (both companies have received backing from investment firm Accel Partners) and Chase Paymentech. Depending on the market, Hailo charges either a 10% commission to drivers or, as in the case of New York, a flat fee which riders pay on top of their fare.
A lot of people think were a payments business and thats how we make our money. But were a network, a matchmaker, a marketplace, Bregman says. What we care about is creating the best experience for passengers and drivers and putting them together in ways that they would not have otherwise been able to do.
Separate from the citys e-hail initiative, VeriFone has been beta testing a digital wallet called Way2Ride. VeriFone's wallet allows riders to access payment cards, tip preferences, and receipt delivery preferences on their phone, and quickly prepay their fare with a single tap using sound-based technology. The consumer-facing wallet will work with cabs that use in-car hardware and processing services from VeriFone. During the companys earnings conference call in March, executives said they plan to add e-hail capabilities to the app in the future.
The slow start to the e-hail initiative is the latest in a series of challenges to injecting mobile technology into New Yorks iconic cab industry. Square embarked on a short-lived pilot to put its mobile card reader in cabs in late 2012, while Ubers attempts to crack to Big Apple cab market ran afoul of TLC regulations at the time.
And despite the hype surround the e-hail technology, the success of the pilot program and full-time implementation of the technology are not foregone conclusions. Critics have expressed concern that the ability to e-hail taxis will make it more difficult for consumers without smartphones to find cabs on the streeta problem the TLC has dealt with in the past.
In the 80s, taxi operators began forming groups that used two-way radios to direct drivers to waiting fares. The issue came to a head when, faced with the rising unavailability of cabs for street hails, the TLC banned the practice in 1985.