NEW YORK -- If MasterCard International has its way, some taxi riders here will soon be able to pay their fares with the swipe of a credit card.

The giant card organization, searching for new markets, hopes to piggyback on a six-month test that will put mobile phones in several hundred cabs.

Starting this month, passengers will be able to charge phone calls on all major credit cards. By September, they should be able to pay fares via point-of-sale devices attached to the cellular phones.

A Billion-Dollar Business

The attraction for MasterCard is obvious: Passengers pay about $7 billion in cab fares a year. Ultimately, credit cards might capture 15%, or $1 billion, of those payments, MasterCard believes.

"It is a cash market that has an excellent opportunity to be a card market," said Scott Carter, manager of small-ticket items at MasterCard.

Indeed, taxi payments are just one of many types of cash transactions being lured by credit card companies. Other targets: supermarkets, fast-food outlets, and post offices.

Authorization Problem

Credit cards have already made some inroads into the taxi market, but their use has been held back by the absence of a way to authorize transactions immediately.

Cardholders typically have received authorization from a dispatcher when calling for the cab. Drivers then imprint the card and give customers a receipt. Cabbies sometimes accept cards without authorization at their own risk.

Some recent tests have used FM radio bands and two-way radios as links into the card authorization systems. But MasterCard thinks the availability of mobile phones could provide a breakthrough.

Easy Linkup

"What's nice about cellular," Mr. Carter said, "is it has its own function as a car-based pay phone. Bringing a dial tone to the cab makes it easy to attach fairly standard point-of-sale equipment."

The pilot is being run by New York City Taxi and Limousine Commission. The vendors include Nynex Corp., Cellular Pay Phones Inc., and other phone providers, and MasterCard will do the marketing. .

To accept cards, cab owners must go through a standard application process with a bank and arrange through Cellular Pay Phones for point-of-sale equipment to be installed.

Cabdriver's Costs

But there are possible drawbacks. Cab owners must pay for the point-of-sale equipment -- about $300 per taxi. What's more, they have to surrender 1.3% of each fare to cover processing charges. Those charges may leave some drivers balking.

"The cab owner will incur some expense," Mr. Carter acknowledged. "But we feel that is more than compensated for by larger tips and longer rides."

MasterCard is also developing card-swipe applications with some Chicago taxicab companies.

Amex Gets a Jump

While the major card players do not yet use on-line authorizations for cab fares in the United States, they have dipped their toes in the taxi market.

Almost 1,000 New York cabs have accepted the American Express card for a year and a half, according to Marcos Rada, director of public affairs at American Express Travel Related Services Co.

American Express captures transaction data on a magnetic stripe attached to the cab's meter. Mr. Rada said taxicabs in Chicago, London, and Stockholm are accepting Amex cards as well.

Visa Sees Growth

Visa U.S.A. said cabs across the country have been accepting its cards for years, using dispatchers to obtain authorization for cardholders. Visa uses on-line authorizations in Japan and Singapore via cellular phones.

Last year, passengers paid $70 million in taxi and limousine fares with Visa cards, said Gregory Holmes, a Visa spokesman, and another $19 million in this year's first quarter. "It's a market that's growing," he said.

MasterCard, using off-line authorizations, reported volume of $31 million last year and $10 million in the first quarter of this year.

The biggest potential new markets for credit cards are government and supermarket payments, which could eventually bring $45 billion in transaction volume, MasterCard estimates. Taxicabs, at $1 billion, and fast food outlets, at $1.5 billion, hold less promise.

Still, with the growth of cardholders slowing and new issuers entering the market every day, the card organizations are eager to entice customers to use their cards more frequently. That's why they are trying to make any inroads they can into transactions normally made by cash.

Ad Blitz Planned

To introduce its taxi program, MasterCard will launch a marketing and advertising campaign with Nynex and the other phone companies this summer, Mr. Carter said.

Bruce Schaller, director of policy development for the New York City Taxi and Limousine Commission, said a number of taxi fleets should have a total of several hundred cellular phones installed by next month.

"If it works out well, you could easily see a majority" of the city's 11,787 cabs equipped with phones eventually, Mr. Schaller said.

Free Phone Installation

As an incentive, phone installation will be free. And cab owners will receive a monthly stipend from the phone provider based on the number of calls made each month.

Will that be enough motivation? "I don't think the drivers are going to go for it," said Willie Bly, managing director of the League of Mutual Taxi Owners, an association of 5,000 cab owners that encompasses New York's five boroughs.

"It's going to be up to the individual if he wants it," Mr. Bly said. "These drivers like to do a cash business." And, they will resent paying the transaction fees, he added.

But Mr. Schaller thinks the cabbies can be won over. Card users tend to ride farther and tip more, he pointed out. And the phones will have a distress button for emergencies calls, an attractive feature for crime-wary drivers.

Although the point-of-sale equipment will accommodate any credit card, MasterCard will be promoted by the use of its logo on the phones, Mr. Carter said. MasterCard is working with Nynex to develop a cone-shaped antenna for the cab's roof that can be recognized by riders looking for a phone and the option to pay by credit card.

New York "will be the proving ground," Mr. Carter said. "If it works here, it will work anywhere.

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