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Scrrrreech! The TLC Explains Why Square Stopped Its Pilot Program in NYC Taxis [UPDATED]

TPEP 2.0 will be determined "by the opposite of an RFP."
 <em>Scrrrreech!</em> The TLC Explains Why Square Stopped Its Pilot Program in NYC Taxis [UPDATED]

Misty, Instagram-filtered memories, of the way we were. (Photo: nycgov.tumblr.com)

Ouch, we think we just got whiplash. A couple weeks ago, Mayor Bloomberg was photo-opping in the backseat with Jack Dorsey, founder of the mobile payments company Square.

But this afternoon, the New York Post got its hand on a letter from Square to the New York Taxi and Limousine Commission (TLC) announcing that the company has suddenly pulled out of its pilot program in yellow cabs, which the agency recently stated was going swimmingly.

The pilot run in 13 cabs was testing Square’s service–featuring iPads in the vehicle’s partition and iPhones in the front–as a replacement for TPEP, the agency’s internal moniker for the TV screens and credit card swipers currently run by an exclusive contract with Verifone and CMT that expires this coming February. 

The letter, signed by Square’s general counsel Dana Wagner and agreed to by the TLC, says:

“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,” noting that the program has already covered 28,000 rides and 100,000 miles.”

Reached by phone, TLC spokesman Allan Fromberg offer some clarification on those developing regulations. “There is no candidate for TPEP 2.0 because is there is no contract!” he said when we asked if Square was still in the running. “Instead of what we did with the two TPEP vendors that exist now [i.e. Verifone and CMT], for TPEP 2.0 we were going to go the rule-making route. So we are going to create new rules and regulations that will set up a foundation of specs–and then any company that meets those specs will be able to compete in the marketplace.”

Said Mr. Fromberg, “This is sort of the opposite of an RFP.”

Given all the fuss we heard about the lack of rules governing e-hailing and credit card processing for taxi apps in a recent City Council meeting, we were wondered if this was related. “Nope, not all,” Mr. Fromberg insisted. “We just think it’s the smarter, more efficient way to go to open the market up to smarter off-the-shelf solutions, as opposed to what we had to do to before and draw a specific custom-made solution,” he added, referring to RFP five years ago when the TLC first starting putting this kind of technology in taxis.

Mr. Fromberg said the he expects to see draft rules for these new specs “by the end of the year.”

He also dismissed rumors floating around last week, courtesy of PrivCo CEO Sam Hamadeh, that Square was about to close a deal with the city to extend its mobile payments system into 1,000 cabs. Any truth to that, we asked? “That’s an absolute no,” he said, emphatically. “No idea where he got it. You’d have to ask Sam Hamadeh.”

By email earlier, Mr. Fromberg characterized Square’s pilot run as a big success, perhaps referring to the intel the city gathered in terms of what they want–or don’t want–in the back of their taxis. “The Square pilot has been a tremendously positive experience for us. From the TLC’s standpoint, it’s achieved every goal we had set for it, and we learned lessons about alternative technologies that we’ll be applying to projects well into the future. It was a total success.”

Square agreed to reimburse medallion owners for the cost of uninstallation of their pilot effort and installation of a new TPEP system. The letter also seems to indicate that Square is still planning on submitting a candidate for “future TPEP:

“It would be commercially unreasonable for Square to pursue a new hardware and software solution for a future TPEP offering while at the same time continue to support the software and hardware solution we rolled out in the Pilot Program.”

UPDATE 6.40 p.m. 10/15: It looks as though Square is indeed eager to become the city’s next TPEP vendor and will apply the lessons learned from the pilot program to develop a new solution. By email, a spokesperson from Square offered the following statement (with a more recent tally of the amount of rides):

“We’re very grateful to the NYC Taxi & Limousine Commission for partnering with us on this pilot. We’ve learned a ton about the specific needs of taxis over the course of more than 34,000 rides and 100,000 miles traveled. We’ll use our findings to further improve Square and make commerce and transportation even easier for millions of riders and drivers in New York and around the country.”

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