(November 15, 2006) MasterCard Worldwide and point-of-sale terminal maker VeriFone Holdings Inc. on Wednesday announced that the 1,600 taxicabs in Philadelphia now accept or will accept MasterCard’s PayPass contactless card by year’s end.

The cabs will use technology from VeriFone Transportation Systems, a joint venture of VeriFone and Queens, N.Y.-based taxi-equipment manufacturer TaxiTronic Inc., which provides the communication links between the cab, dispatcher, and payment processor. Besides wireless credit and debit card payments, the new system will provide networked fleet-management capabilities and consumer services that include navigation, scheduling, trip logs, lost-and-found tracking, and panic-button alerts, according to a release from MasterCard and San Jose, Calif.-based VeriFone. It also will enable the Philadelphia Parking Authority, the city agency that issues taxi medallions, to determine whether cabs are serving all parts of the city, a PPA spokesperson says.

“It’s a multi-million dollar opportunity that also provides ongoing recurring revenue,” says a VeriFone spokesperson, adding that the company has more taxi projects planned in other cities.

PayPass uses radio-frequency identification (RFID) technology to transfer data between a terminal and the chip in a PayPass-equipped credit or debit card or fob. To use PayPass in participating Philadelphia taxis, passengers tap their PayPass-enabled card or fob on a contactless reader attached to a VeriFone Omni 7000 terminal located in the back seat of the taxi. The customer-facing terminal—the same type used by fast-food giant McDonald’s Corp.—is networked to another VeriFone system, the MX870, a multimedia device located near the driver that provides routing, navigation, and other information. The taxi payment transaction is transmitted via secured cellular signal for processing through the VeriFone Transportation System Gateway to the MasterCard network for clearing and settlement, the release says.

Besides paying the fare, passengers can enter a tip amount on the Omni 7000. No signature is needed for transactions under $25. VeriFone claims that PayPass cuts approximately 45 seconds off the transaction time in taxis when compared to cash, and 15 seconds when compared to swiping a traditional payment card. Since PayPass cards also have a magnetic stripe, all Philly cabs will also be able to take regular payment cards.

The PPA helped pay for implementation of satellite-linked Global Positioning System (GPS) technology in city taxis by tapping a $6 million fund it inherited last year, after it took over taxi licensing from a state agency, the agency’s spokesperson says. Apart from maintenance expenses, “the taxi drivers do not have to pay anything,” the spokesperson says.