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Access to Taxicabs for Unbanked Households: An Exploratory Analysis in New York City

Taxicabs are a critical aspect of the public transit system in New York City. The yellow cabs that are ubiquitous in Manhattan are as iconic as the city's subway system, and in recent years green taxicabs were introduced by the city to improve taxi service in areas outside of the central business districts and airports. Approximately 500,000 taxi trips are taken daily, carrying about 800,000 passengers, and not including other livery firms such as Uber, Lyft or Carmel. Since 2008 yellow taxis have been able to process fare payments with credit cards, and credits cards are a growing share of total fare payments. However, the use of credit cards to pay for taxi fares varies widely across neighborhoods, and there are strong correlations between cash payments for taxi fares and the presence of unbanked or underbanked populations. These issues are of concern for policymakers as approximately ten percent of households in the city are unbanked, and in some neighborhoods the share of unbanked households is over 50 percent. In this paper we use multiple datasets to explore taxicab fare payments by neighborhood and examine how access to taxicab services is associated with use of conventional banking services. There is a clear spatial dimension to the propensity of riders to pay cash, and we find that both immigrant status and being 'unbanked' are strong predictors of cash transactions for taxicabs. These results have implications for local regulations of the for-hire vehicle industry, particularly in the context of the rapid growth of services that require credit cards. Without some type of cash-based payment option taxi services will isolate certain neighborhoods. At the very least, existing and new providers of transit services must consider access to mainstream financial products as part of their equity analyses.