A taxi meter is an electronic or electromechanical device installed in a cab that calculates the fare for a passenger's trip based on a combination of distance traveled and time elapsed. The device functions by receiving electrical pulses from a sensor attached to the vehicle's transmission; for every set distance (such as every 1/5th of a mile), the meter adds a pre-determined monetary unit to the total. Crucially, the meter also accounts for "wait time"—if the taxi is stuck in traffic or moving below a certain speed threshold (typically around 8–12 mph), the meter switches from distance-based to time-based billing. This ensures the driver is compensated even when the vehicle is stationary. Modern meters in 2026 also integrate GPS tracking for audit trails and can automatically calculate additional surcharges like airport fees, late-night premiums, or tolls. The primary purpose of the meter is to provide a transparent, standardized, and regulated billing process that protects both the passenger from being overcharged and the driver from being underpaid.