TLC Releases New Rules That Permit E-Hailing & Paying with Apps, May Cancel RFP [UPDATED]

Free market floodgates are open for business.

(Photo: Wikimedia) (Photo by Chris Hondros/Getty Images)

UPDATE: The TLC is only contemplating canceling the RFP for smartphone apps. “While we don’t anticipate the need to proceed further with the RFP, if the rules are not passed as proposed, we may in fact choose to proceed with it,” TLC spokesman Allan Fromberg clarifies. 

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As expected, the New York City Taxi and Limousine released proposed regulations today that call for allowing riders to e-hail and pay for taxis through a smartphone app. However, along with the new rules, the TLC is cancelling is considering canceling its request-for-proposal from March soliciting smartphone apps: “Because the e-hail rules will enable app developers to offer riders fare payment products, the RFP will no longer be necessary,” the agency said in an press release.

Nineteen startups submitted proposals, including Uber, Hailo, Get Taxi, and Taxi Magic.

The process for modernizing the yellow cab riding experience has been tumultuous, particularly since the TLC put out the RFP without actually issuing new rules about how the apps could function–angering the City Council.

The TLC has also thrown out the idea of an RFP for an updated version of the TV and credit card swipers located in the taxi partition called T-PEP. When the mobile payments company Square abruptly ended its pilot program in anticipation of new rules on how T-PEP 2.0 should function, TLC spokesman Allan Fromberg told Betabeat that the agency was opting for “the opposite of an RFP.” Instead, he said, the agency would create new rules “that will set up a foundation of specs–and then any company that meets those specs will be able to compete in the marketplace.”

The Randians among us will no doubt embrace the possibility of a free market approach (although apps still have to be licensed with the TLC.) But the proposed rules are far from finalized. The agency is hosting a public hearing on November 29, 2012 and anticipates a vote during a meeting on December 13th. In a statement, TLC commissioner David Yassky said he wants to “get apps on passengers’ smartphones by early next year.”

In today’s statement, the TLC pointed out that passengers have expressed a preference for paying for taxis by credit card, noting that 50 percent of all taxi trips are paid for by credit card and that 57 percent of all fare dollars are paid by credit card.

Nonetheless, the proposed rules “will also structure the means for apps to interface with the taxi technology systems” or T-PEP, the agency said, in order to “create an ongoing framework for credit card payment.” The inclusion of the T-PEP seems to hinge on the fact that the TLC has exclusive contracts with Verifone and Creative Mobile Technologies that don’t expire until February, 2013.

Here are the highlights, according to the TLC’s press release:

Proposed Rule Highlights


  • Rule permits app developers to market e-hail apps and drivers to use apps, provided the app is licensed by TLC.
    • Rule would permit full range of app business models (apps that do/do not include confirmation from driver; apps that do/do not include payment for taxi trip).
  • Use of e-hail apps is optional for drivers.
    • Fleets cannot require drivers to use these apps.
    • Use of apps not permitted unless vehicle is legally standing.
    • Only licensed taxi drivers in licensed taxicabs can use e-hail apps.
    • Apps may not be used at JFK or LaGuardia airports to avoid disruption of managed passenger/taxicab queues, or at Penn Station and Grand Central taxi lines.
    • Apps must not disclose passenger destination information (or other identifying information) to drivers.  Driver only sees pickup location. 


  • E-hail apps that also provide for payment must integrate with TPEP, and payment infrastructure must meet same stringent security standards as TPEP.
  • App that includes trip payment must obtain fare by direct transmission from meter (via TPEP).  Without this, there is risk of driver error/wrongful entry of fare.
  • Provides for confirmation of payment to driver (also via TPEP).
  • TPEP systems are required to integrate all TLC-approved apps that provide fare payment.
  • Apps including trip payment must identify any service charge collected by the app separately from the metered fare (including all tolls, surcharges and MTA tax) and any gratuity (gratuities shall remain non-mandatory, and shall be in an amount to be selected by passenger).
    • Total amount designated as a “tip” or “gratuity” must go to the driver.
    • Driver cannot receive any payment for e-hail trips other than fare and tip.  As a result, drivers will not prioritize e-hail trips over hand-in-air hail trips.
    • Rules permit pre-set tip amounts/percentages, so long as that amount can be changed by passenger.
    • App including trip payment must accept, at least, AmEx, VISA, MasterCard and Discover.
    • App including trip payment must offer a receipt, which can be an electronic receipt (e.g., email, SMS), at the passenger’s choice.
    • Rules permit pre-payment (prior to end of trip) to expedite process.
    • Rules permit split fares among passengers using the same app.
    • Drivers cannot accept payment by any apps other than TLC-approved apps.


T-PEP 2.0 Rules Would Require:

  • Display of current rate code and a running total fare for the ability to see itemized fare at any time;
  • Optional acceptance of electronic signature and provision of electronic receipt;
  • Allow for pre-payment via early swiping & approval by the Passenger to speed disembarkation;
  • The option of providing splitting of fares;
  • Features to assist visually-disabled passengers with paying fare;
  • Improved Spanish language content on PIM;
  • Expanded passenger route map (covering more ground for out-of-town trips);
  • Geo-fence rate code 4 (preventing activation unless outside of NYC);
  • Acknowledgement and requirements for integrating with smartphones;
  • Option to pay drivers directly via electronic debits;
  • Automatically deduct the $0.06 healthcare fee for each transaction;
  • More frequent updates to TLC content and surveys;
  • Expansion of TLC Audio/Video Content;
  • Expanded text messaging capability;
  • More and better passenger survey capabilities.

This is a breaking news post and we will update you as we learn more: 

TLC Releases New Rules That Permit E-Hailing & Paying with Apps, May Cancel RFP [UPDATED]