[developer2]

The legitimate credit card machine is provided by the taxi company. At least for Co-Op Taxi in Montreal, the company takes a 7% cut of the fare for all credit card transactions made on such machines. So some drivers buy a Square reader and set up a personal account to fraudulently take payments directly from customers into their pocket to avoid the 7% cut.

The driver is not only stealing from their company, but is also opening up customers to suspicious transactions. Do I trust a random criminal - they are criminals, no doubt about it - to swipe my credit card into his cell phone? No.

[stormbrew]

I asked an Edmonton co-op driver about the commonness of refusing to use card readers and he told me that one reason it happens, particularly at the end of a month, is because the dispatchers don't pay out credit card payments for something like 6 weeks. I imagine using Square helps get around that as well.

Agree on the suspicious transaction (though the opportunity for a cab driver to put a skimmer in their machine is pretty substantial to begin with), but I have a hard time seeing this as stealing from the dispatcher. If the cab takes cash, this is really just the driver acting as middleman and paying cash to the dispatcher. Unless they're also doing it unmetered, I guess, but that's a whole other ballgame.

In particular, I expect the dispatcher claims the additional cut is for transaction fees associated with a credit card. The driver is in this case taking the fees on themselves.