How Taxi Meters Work

To put it simply, taxi meters measure distance and time. They then convert those measurements into a fare. Taxi fares are set by the area the taxi cab operates in — in other words, it might cost more to travel the same distance or time in one city than it does in another. Fares may also change based on the number of passengers, baggage assistance and if the final destination requires the taxi to cross state or municipal lines.

No matter where they operate, however, all taxi meters measure the distance a cab covers, plus any time spent waiting. That way, the driver gets compensated for time so they don't lose out on money just because they're stuck in traffic. It's also why a cab ride from point A to point B may cost you more when there's traffic than when there's not, even if the distance covered is the same.

A taxi meter uses electric pulses to measure both distance and time. To get the distance traveled, the meter relies on a sensor attached to the cab's transmission. The sensor sends an electric pulse to the meter every time the cab travels a given distance. Inside the meter itself is a timer that sends out a pulse when a set amount of time passes. Pulses come from either sensor at intervals that are smaller than the fare interval. For example, a cab might charge you based on every 100 yards (91.4 meters) of travel, but the distance meter will pulse at each yard (0.9 meters). When the meter gets 100 pulses, it adds to the amount of the fare.

Here's an example of fares from New York City. Just hailing a cab and getting in will cost you $3. For every fifth of a mile (0.3 kilometers) you travel, 70 cents is added to the fare (a fifth of a mile is four city blocks). For every minute the cab sits without moving, another 70 cents gets added to the fare.

Real traffic conditions aren't that simple, however. In a typical New York cab ride, you'll deal with stop-and-go traffic. To deal with stop-and-go traffic, meters merge calculations from both the time and the distance sensors, counting whichever pulse— time or distance— arrives first. Remember, the pulses come more often than the actual distance or wait time. So, if you wait 30 seconds in traffic and then cover two blocks in New York City, the taxi meter will merge the two and add 70 cents to the fare: 35 cents for the distance traveled and 35 cents for the time spent waiting.

No matter what, you know you're going to get charged for the time you spend in a cab and the distance you travel; however, some areas have other fares that are added to your time and distance charges. The cab driver enters those fares on the meter itself.

The most common fare type is a simple pickup fee. In the New York City example we mentioned on the previous page, it costs $3 just to get into a cab. If you get a cab in New York between 4 and 8 p.m., you'll get charged an additional peak-hour surcharge of $2.50. After 8 p.m., there's a night surcharge of $1. Plus, the passenger is responsible for any tolls, and there's a 50-cent sales tax on each cab ride.

Most municipalities only cover fares within their limits. Generally speaking, if you ask a cab to leave city limits, you get charged a different set of fares. For example, if you catch a cab in New York to go to Newark Airport, you get charged a Rate Code 3: the normal time and distance traveled rate, plus a surcharge of $20. If you take a cab from New York City to Westchester or Nassau Counties, the portion of the trip that's within those counties costs twice as much as the rate in the city. It's $1.40 for every fifth of a mile (0.3 kilometers) or minute of waiting time. New York cabs don't charge for additional passengers, but cabs in Washington D.C. do — it's $1 for additional passengers.

Most cities require cabs to have all fares posted in the cab, so you can have a good idea of what you should be charged. Of course, that doesn't always stop a very few unscrupulous drivers from trying to take advantage of passengers, particularly if the passengers don't know the area well.

One of the advantages of taxi meters is that they provide an accurate measure of what the fare should be. However, that doesn't mean that there aren't ways for taxi drivers to take advantage of their passengers. While the vast majority of cab drivers would never take advantage of a passenger, it pays to be on your guard in case you encounter one of the few drivers who would.

A common taxi driver scam is to get more money from a fare by taking the long way. While that sometimes means taking a less-than-direct route, in egregious cases it can mean driving passengers around in circles. This type of scam usually only works on people who are unfamiliar with the city they're in. If you're traveling, keep a map handy and know the basics of the most direct route for where you want to go. You can even download smartphone apps that calculate the most direct route and let you know what the fare should be.

While taking the long way is a low-tech scam, drivers can also take advantage of passengers by adding surcharges or changing the fare type to one that costs more. Remember how fares that take the cab into Westchester and Nassau Counties from New York City cost double the rate of travel within the city? Fares within the city are Fare Code 1; drivers set the fare code when they pick up passengers. In 2010, New York City officials found that cab drivers had been charging the Nassau and Westchester fare rates for fares in the city by entering Fare Code 4, which tells the meter to calculate the fare at twice the rate for travel within the city. You can protect yourself from scams like this by knowing the fare codes for the city you're in and making sure the driver is using the right one. Fare codes should be posted in the cab. If you feel like the driver is using the wrong code, get their license information (which should also be posted in the cab) and report them to their city's taxi commission.

Taxi meters use objective measures to protect drivers and passengers. As long as you pay attention to the meter and know your rights, there's no reason to worry that your next cab ride will be anything less than wonderful — assuming, that is, you can find one.