Ride or Die

Cab Fight! New York City Vendor Sued for Breach of Taxi Technology Agreement

Good news for Square?
 Cab Fight! New York City Vendor Sued for Breach of Taxi Technology Agreement


With all the excitement over last week’s decision to test out taxi apps in New York City, another technological step forward got overlooked. During a meeting at its Beaver Street headquarters last Thursday, the Taxi and Limousine Commission also unanimously voted in favor of new rules for those credit card swipers and “entertainment systems” (scare quotes necessary) in back of your cab, referred to as T-PEP.

Rather than stick with exclusive, bureaucratic contracts–like the ones New York has with VeriFone and Creative Mobile Technologies–competition for T-PEP 2.0 will go free market in February. TLC Chairman David Yassky told us the rule changed was designed to keep vendors competitive and open to new technologies. Because of the barriers to entry with mobile credit card processing, the city would most likely see one or two new players. That still means that Jack Dorsey’s mobile payments company Square, which ran a pilot program with iPads in taxis earlier this year, has a chance to become a contender.

But last week’s vote didn’t signal the end of all the sniping between competitors.

Yesterday, Creative Mobile Technologies (CMT) filed civil action against VeriFone seeking damages in excess of $250 million. The suit charges Verifone with “wrongful, malicious, tortious and contractual breaches of CMT’s agreement with Verifone, its “exclusive in-taxi advertising partner.”

According to a press release from CMT:

Among other things, the lawsuit alleges that VMS withheld financial information from CMT, delayed payments to CMT for certain advertising, refused to pay CMT for other advertising, and violated the agreement’s broad rights of first refusal by installing similar technology and placing advertisements in taxis outside of New York City without first offering those opportunities to CMT as required under the agreement. Such locations include Miami, Las Vegas, Atlanta, San Francisco, South Africa, and London.

TLC spokesperson Allan Fromberg told Betabeat, “This [lawsuit] would have no impact whatsoever on T-PEP,” pointing out that VeriFone and CMT “are competitors who have separate and distinct customers.” Verifone spokesman Pete Bartolik said the company does would not comment on pending litigation, however he did say that VeriFone will be “active participants” in the revamping the technology in the back of your cab.

Your move, @Jack.


Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com