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square-cardTaxi drivers, at least from my experience, typically don’t like it when riders ask to pay with credit card and prefer to accept cash instead.

But my past two experiences in Seattle taxicabs were different. When each ride ended, I had no cash and said I could only pay with card.

Surprisingly, each driver pulled out a Square dongle for their iPhones. They swiped my card, I signed on the screen and had a receipt sent to my email. Within seconds, my ride was paid for — far easier than any credit card transaction I’ve ever done in a taxicab.

So why did these drivers use Square? To save money, most likely. Every time a passenger pays with a card, drivers have to pay a processing fee to cab companies — and it’s likely more than the 2.75 percent fee that Square charges for each transaction. Money made from Square transactions are also deposited into a bank account the next business day, so drivers don’t have to wait to see the fruits of their labor.

This isn’t the first time taxi drivers around the U.S. have used Square. In fact, the company told us it has thousands of drivers around the country using Square to process payments. “Taxi drivers are among our most active and loyal users,” a Square spokesperson said. Some drivers in San Francisco are even saving up to $35 per month by using Square.

Square’s marketplace features several Seattle area taxi drivers.

But it hasn’t been smooth sailing in every city. For example, St. Louis first banned the use of Square in taxis before approving it months later. Drivers in Chicago were initially fined by taxi companies for using Square. In New York, Square tested out a mobile payment pilot program for taxicabs before cutting it short in 2012.

The City of Seattle told us that it does not have any written regulation on how exactly drivers can accept payment. The only existing rule, established in 2005, is that all taxicabs must be able to accept credit cards — however, how exactly they do that isn’t specified.

At least one taxi company in Seattle doesn’t seem to have a problem with drivers using the mobile payment platform. Belyou Dagnew, general manager for Orange Cab, said that some of her drivers use Square and added that Orange Cab is O.K. with the technology since its drivers are technically independent contractors. These drivers pay companies like Orange Cab to lease vehicles and then keep what they make off fares. But, when passengers use a credit card, drivers must pay for the processing fees.

I rode again in another Yellow Cab this past Saturday and asked my driver about using Square after using it twice before. He echoed what Dagnew said, noting that it didn’t matter if Square was used or not since it is up to the drivers to figure out how to collect their money. A quick search on Square’s marketplace actually shows a bevy of drivers from different local companies in Seattle that have created profiles.

lyft-pinkUsing innovative technology inside a taxicab was, at the very least, interesting to see given what’s going on in Seattle right now. Complaints about payment in taxicabs — specifically the fact that drivers don’t like accepting credit cards — is one reason why some prefer the new ride-sharing startups like UberX, Lyft and Sidecar, all of which allow you to pay with your smartphone (apps like Taxi Magic and Flywheel offer the same payment option for taxicabs and for-hire rides, too, but aren’t required).

But these companies could soon be essentially put out of business if the city moves forward with a proposed ordinance that would cap the number of UberX, Lyft and Sidecar drivers to 300. Many argue that these startups, which allow you to book and pay for a ride with your smartphone, offer a more innovative and convenient alternative to traditional taxi cabs and think that the city should not regulate them.

Others, especially those in the taxi and for-hire industry, say that the new services should be regulated or curtailed, and that they should not get a free pass on regulations simply because they utilize new methods for attracting riders.

The Seattle City Council’s Committee for Taxi, For-hire, and Limousine Regulations is expected to vote on the regulations at a meeting this Thursday at 4 p.m. See all of our coverage on the ride-sharing issue here.

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