At least two major cab companies in Toronto charge customers a user fee if they pay with a credit card, a practice that the city says violates municipal bylaws.

CBC News contacted a number of Toronto's largest cab companies and two admitted applying an additional charge — known either as a "network" or "transaction" fee — to bills paid with a Visa or MasterCard credit card:

• Maple Leaf Taxi charges 50 cents per transaction.
• Crown Taxi also charges 50 cents per transaction, labelled an "airtime" fee.

A Crown Taxi employee originally told CBC News that the company charges a $1 fee for credit card transactions. Ali Gowher, the general manager of the company, contacted CBC news Thursday evening to clarify that the company only charges 50 cents per credit-card transaction.

He also said none of the money collected from the credit card transaction goes to the taxi company. Instead, that money goes directly to the company that provides the machine that processes the transaction.

Management at Maple Leaf Taxi did not respond to queries about why the company was adding the fees to metered fares.

Bruce Robertson, the director of Toronto's licensing and standards division, said news of the fees came as a surprise to him.

"It's not authorized under the city's bylaws to charge anything more than what's on the meter," he said. "Now that it's been brought to my attention, I'll have my inspectors look into it. And on an individual basis we would consider that to be an overcharge."

The general manager of Beck Taxi said her company doesn't ask customers to pay a credit card service charge, adding it would be bad for business.

"I'll use the analogy of going into a restaurant. If I were to pay for my meal with my Visa card and I was told there would be an extra fee for using my Visa, I would be very upset," said Gayle Beck-Souter.

MasterCard Canada is also taking issue with the fee.

"MasterCard is unaware of this particular additional fee, however a ‘network fee’ added to a customer’s payment would be considered a surcharge," the company said in a written statement to CBC News.

"A merchant who accepts MasterCard and then subsequently surcharges a customer who opts to pay with their MasterCard is technically violating the rules of their agreement."

Meanwhile, Robertson is advising anyone who is charged extra to contact Toronto's licensing department to lodge a complaint. Cab companies who are found to be taking in more than the fare as indicated on the meter could be fined, he said.