“We got a love letter from the TLC,” Uber CEO Travis Kalanick just told Betabeat over the phone. He was referring, sarcastically, to a statement issued today by the Taxi and Limousine Commission to “remind” medallion yellow cab drivers and owners that the TLC “has NOT authorized any electronic hailing or payment applications (‘apps’) for use in New York City taxicabs.”
The TLC’s statement (pasted below) is clearly a direct response to Uber’s thwarted attempted to launch an app to digitally hail and pay for yellow cabs in New York City. (Uber already operates a separate request-a-ride payment app for private black cars in New York.) “Basically it’s saying that Uber can’t do credit card processing, that’s what it’s saying, as far as I can tell,” Mr. Kalanick told Betabeat. “If we don’t do credit card processing and the drivers are stopped when they get the pick up request, we’ll be okay,” he added.
Uber will still be permitted to offer New Yorkers a free taxi ride worth up to $25 (the deal expires next Tuesday), the TLC told Betabeat, but drivers will be penalized by fines or suspension if they use the app for payment.
Check out our interview with Uber about its plan for a New York City taxi service that only costs a 20 percent tip.
The issue is around the TLC’s existing contracts with Verifone and Creative Mobile Technologies, the companies that power the entertainment screen and credit card processing on the partition of your taxi. The exclusive contracts are around running the screen and the credit card swipe, referred to internally as the Taxi Passenger Enhancements Program (TPEP).
A representative from the TLC clarified Mr. Kalanick’s interpretation, noting that, “Due to contractual obligations, payment apps cannot be used while the existing technology contracts are in place. However, we intend to update our regulations to reflect new innovations and new realities by February when existing contracts expire,” adding, “We don’t approve or disapprove apps.”
The TLC rep said this will does not affect the agency’s plans to go forward with a smartphone app RFP. Earlier this year, Uber was one of at least four companies to respond to a request for an app that lets riders pay for cabs with their phone. As stipulated in the RFP, any app approved will be fully integrated with TPEP and existing vendors, so there is no regulatory issue there.
By February, when decades-old rules governing the TLC are updated, we might well see other options enter the market. The TLC seems less resistant to change than hampered by existing rules and contracts.
Mr. Kalanick said he intends on fighting this, regardless. “Our attorneys still say that credit card processing is totally legitimate and we should be able to do this,” he insisted. “We believe we are totally legal.”
In an earlier interview with Betabeat, Josh Mohrer, Uber’s general manager in New York City said, “You can’t really RFP your way to innovation.”
Mr. Kalanick said Uber has a couple different options in terms of proceeding with its plan for a taxi app in the immediate term. “We can offer it for free. Or Uber can help you get the car, but then you’d have to pay normally inside the taxi,” he said, adding, “But still our attorneys tell us that we should be able to process credit cards, that we’re not breaking anything regulatory or in contract.”
He characterized negotiations as still in flux. The point of giving New Yorkers a free option, was to allow time for “the TLC to digest bringing this innovation to market,” he said, noting, “This is moment by moment, this is a very fluid situation. In a week things can change.”
Immediately after the TLC issued its statement, Mr. Kalanick had a more candid take on the TLC’s comments: “This makes New York a worse off place,” he said, “People are more likely to get stranded in outer boroughs, and taxi drivers will have a harder time making minimum wage. This looks like a regularity regime resisting change, but without the regulations to back it.”
This post has been updated to reflect breaking news.
Here is the TLC’s press release:
TLC Commissioner/Chair David Yassky………..
“The TLC is eager to pave the way for taxi riders to take advantage of the most up-to-date technology, including smartphone apps that may help passengers locate available taxicabs more quickly. However, current contractual agreements between the TLC and payment processors restrict the use of apps. We intend to quickly begin a rulemaking process that will permit broader use of apps when these contracts expire in February. As part of that process, we will work collaboratively with the livery, black car and taxi industries to address their concerns about the impact of apps on existing business models and to ensure that our rules provide full protection to passengers. In addition, we are currently requesting proposals for a smartphone payment system that will integrate with our existing technology. Time and again, New York City’s Taxi and Limousine Commission has led the country in terms of putting new technology to work for riders and we are eager to see products that allow taxi passengers to take advantage of the latest innovations.”
NOTE: The notice below will communicate to our regulated industries the relevant current requirements, in advance of our commencing the rulemaking mentioned in Commissioner Yassky’s above statement.
Electronic Hailing and Payment
The New York City Taxi and Limousine Commission (TLC) reminds medallion taxicab drivers and owners that it has NOT authorized any electronic hailing or payment applications (“apps”) for use in New York City taxicabs.
In light of the recent release of applications which may permit the electronic hailing of taxicabs and payment of taxi fares, including a release by UBER, taxicab drivers and owners are reminded that:
- Taxi fares must be accurately entered into the TPEP system. A passenger paying by credit or debit card must use the TPEP system.
- TLC rules also require that medallion owners maintain accurate trip records; if a driver accepts payment of taxi fares through a payment app not connected to the TPEP system, the trip records will not be accurate and the medallion owner will be summonsed.
- A driver cannot charge a passenger more than the fare on the meter for a taxi ride. If a driver uses a payment app that charges the passenger more than the fare on the meter for a taxi ride, the driver is responsible for a passenger overcharge.
- A driver must not use any electronic communication device, including a cell phone or smartphone running a hail or payment app while operating a taxicab. Any driver using such a device at any time except when the taxi is legally standing will be summonsed.
Drivers and owners are reminded that violations of Commission rules can lead to fines and, in some cases, the suspension or revocation of their TLC license.