Jack Dorsey's Square Credit Card Readers Banned in St. Louis Taxis, Drivers Fight Back

Last month, Jack Dorsey, St. Louis native and Twitter co-founder, was back in his hometown to kick off "Let's Talk," an event series for business owners, hosted by Square Inc., his other very successful company. This startup is most known for its tiny, convenient Square credit card readers, which plug directly into mobile devices. It's popular across the country -- but not all local fans of the product can use it.

Raja Naeem, a St. Louis cab driver, had a brief conversation with Dorsey after his event, letting him know that the St. Louis Metropolitan Taxicab Commission (MTC) has formally banned the credit card technology -- and is even fining drivers who use it.

"I shook his hand and I said, 'You are promoting your product here, but I'm getting tickets from St. Louis officials and I've got to pay $150 fines,'" Naeem recalls to Daily RFT.

See also: St. Louis Cabbies Allowed to Wear Blues Gear As Muslim Driver Fights to Wear Religious Garb

Naeem says he showed Dorsey a printout of the homepage of stl-taxi.com, which currently states in bold and underlined type: "The Square Credit Card Reader is not an MTC approved device and use of the Square device is in violation of the MTC Vehicle for Hire Code."

Why is this cab driver getting into so much trouble for using Square -- and can Dorsey and his company do anything about it?

The dispute over the use of Square is the latest fight between metro taxi drivers and the MTC, which oversees licensing and regulation of local taxi companies and their cabbies. As we covered earlier this year, Naeem was at the center of one of the most high-profile controversies, in which he alleged that the MTC was discriminating against him and harassing him over his religious garb.

Now, Naeem and a group of angry drivers are alleging that MTC officials are violating the law by banning this simple technology that saves drivers and passengers money. The dispute has the added twist -- that both sides acknowledge -- of the credit card readers being the product of Dorsey, a nationally recognized tech entrepreneur with very strong St. Louis ties.

Square officials even tweeted about the joy of seeing the reader used here on the company's recent visit:

The protesting drivers and MTC officials tell two very different stories about why the use of Square is currently prohibited.

According to the drivers, taxi commissioners do not want drivers to use Square, because they can get better profits from the existing credit card transactions. A petition signed by fifty drivers, full document on view below, says drivers in the current system are forced to give over (depending on their company) anywhere from five to thirteen percent of their pay from credit card transactions to their companies, "placing a severe economic burden on the taxicab drivers of St. Louis."

They argue that there is a clear conflict-of-interest, since three commissioners who vote on the policy are also owners of the companies that benefit from the transactions (and thus would not want Square to be used). This, the petition alleges, is a violation of Missouri statute, which says officials cannot use their authority for their own financial gain.

"We as drivers licensed by the MTC should be allowed to use any form of electronic payment from our customers agreed on between the driver and the customer," the petition reads.

Raja Naeem speaking at a press conference last year. - via KSDK video.
via KSDK video.
Raja Naeem speaking at a press conference last year.

"They are basically taking money right out of the cab drivers' pockets and the customers pockets," says attorney Drew Baebler, who has represented Naeem and drivers in a number of matters.

The MTC passenger "bill of rights" -- copy on view below -- also says passengers should be allowed to pay with any major credit card without additional charges. The system MTC requires mandates customers pay $2 convenience fees.

"They're forcing these drivers to basically extort money out of the passenger," says Chuck Cole, another longtime local cab driver. "Drivers don't want to charge passengers these fees."

Naeem provides us with his recent receipts, which he says shows him losing more than ten percent of the charges through the current system. Square's rate is 2.75 percent.

Ronald Klein, director of the Metropolitan Taxicab Commission, defends the policy to Daily RFT, arguing that the MTC has the passengers' interest in mind and has not violated any laws or codes.

Most importantly, he says that he is in talks with Square officials and is hopeful that the MTC may be able to permit its usage in the future.

click to enlarge Square's "Let's Talk" series. - via Square / Facebook
Square's "Let's Talk" series.

Klein argues that the only reason MTC has not allowed Square thus far (and it's the commissioners who ultimately vote, not him) is that he and the commissioners are not confident yet that they could easily get to the bottom of fraud accusations from customers.

"My job is to protect the public," he says. "When you use Square, I can't find out whether you overcharged."

If each individual driver opens an individual Square account, he says, "whenever somebody makes a complaint about being overcharged, there are 1,300 separate vendors out there to try and track down. It's burdensome."

Continue for more of our interview with Ronald Klein and for Square's response.

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