The New York City Taxi and Limousine Commission has approved a proposal to deploy Square payments technology in 30 taxicabs.

It is a test phase that will begin in a few weeks, according to All Things D, which also reported that VeriFone Systems Inc. and Creative Mobile Technologies LLC hold contracts to power credit card payments in more than 13,000 cabs across the city, and many more nationwide.

The Growth of Square

In a short amount of time, Square, a mobile payment device backed by Twitter founder Jack Dorsey, has made significant inroads into mainstream retail. The card reader is now sold at Wal-Mart, joining Apple, Best Buy, Target and RadioShack. So many retailers are carrying the device that Square recently launched a store locator.

More telling for the industry is the volume of transactions the card readers are processing: $2 billion per year.

Mobile Payment Breakthrough

Square’s growing recognition and use—such as in New York City’s thousands of taxi cabs—could offer the market another benefit: greater acceptance of alternative payment methodologies.

Social media driven commerce, for example, is hampered by a distrust of its payment mechanisms. The majority of consumers (55%) are not comfortable giving their credit card information to a known brand through a secure payment process on a social media site, according to a survey released in February 2012 by Digitas.

A PaymentOne survey conducted by Javelin Strategy & Research released in December 2011 also found significant security concerns among social media users.

There is more acceptance of mobile payment technologies though. Compete found that consumers are most likely to pay for groceries at the supermarket using a near field communication (NFC)-equipped mobile phone rather than a credit or debit card. Twenty-five percent of consumers said they would be likely to buy groceries via mobile phone.