Square, the mobile-payments firm founded by Jack Dorsey, abruptly ended a pilot program last week for a new payment system in the back of New York City cabs.
In an Oct. 12 letter to the Taxi and Limousine Commission, Square indicated that it needed to overhaul its payment system in light of new rules the commission is drafting to govern credit-card payments in cabs, according to a copy of the letter obtained by The Post.
“Square has determined, in light of developments in prospective taxicab regulations in New York and other markets, and based on what we have learned conducting the Pilot Program to date, that we wish to pursue a different hardware and software solution,” Square wrote.
Square didn’t specify in the letter how any new rules might affect its current offering.
The TLC is working on rules regarding the types of companies that can compete for taxi payments. The rules would allow any company that complies with them to operate in city cabs.
Square’s pilot program, which had rolled out to 15 cabs, was delivered through an iPad outfitted with a credit-card reader. Customers could swipe their card at any point in the ride.
The move follows reports that Square is exploring opportunities to put its payments service in more city cabs.
Both the TLC and Square said last week that the program had accomplished its mission and that ending it early was always a possibility.
Square’s program was slated to go until Feb. 15. The TLC allowed Square to terminate it early without the agreed upon 45-day notice period, according to the letter.
Square’s exit from the pilot program could be costly for the company as it will pay for the cabs to install new systems, which could cost more than $3,000 a piece, according to the letter. The bill could amount to $40,000 to convert all the taxis in the program.
Taxi payments are a hot area for new types of payment companies looking to establish their services. So far, two companies dominate New York’s yellow cabs, VeriFone and CMT.
Operating payments in taxis is a complex and regulated business. The services also track taxis on GPS, report finances for tax purposes and deliver snippets of TV shows.
Last week, Square was in the spotlight when Mayor Mike Bloomberg and CEO Jack Dorsey were photographed taking a ride in a taxi equipped with Square.
gsloane@nypost.com