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By acting as a barrier to entry to the taxi market, it has the consequence of creating a market for unlicensed cabs, especially in areas that tend to be underserved by medallion cabs. The medallion system has several effects upon the illegal transportation market.

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Medallions are transferable, and while some cab drivers own their own medallion, most must lease one on a daily or weekly basis from a fleet owner. In general, this leads to medallions becoming ever more expensive-a New York City corporate medallion can sell for up to $1 million each. The city issues a fixed number of medallions, and only medallion taxis are allowed to pick up fares.

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In some large American cities, and in Hong Kong, a medallion system is used to license cabs. In some places, providing a ride in a personal vehicle as a part of another job, such as caregiving, may be legal, sometimes with regulation of certain factors, such as insurance coverage.

Examples include ' dollar vans' plying city bus routes in New York City, and van services that offer rides between major cities. There are also non-taxicab based unlicensed transportation providers. Some areas also have sedan services, which likewise respond to telephone dispatch. However, outside of the core Manhattan business district, livery cabs are ubiquitous and will respond to street hails. They cannot legally pick up street hails or enter taxi stands at airports. In New York City, Baltimore, Philadelphia, and other cities non-medallion car services (also called livery cabs) lawfully exist but are only supposed to respond to telephone dispatch. The car itself is usually large, similar in feel to a licensed taxi. Unlicensed taxis often do not have meters, so the fare is usually agreed to at the beginning of the ride. Sometimes, drivers will also wait at a location where taxi service is in demand, such as airport or train station arrival areas or shopping centers, asking arriving passengers if they need a ride. Unlicensed cabs may be found cruising the residential streets of a city, typically in the working-class neighborhoods. In the Netherlands they are called snorders Types and exceptions In Jamaica, illegal taxis are referred to as robots or robot taxis. In Algeria, they are referred to as le clandestin. Thus the slang 'PH' indicates an informal blend of the two states. On a private car's licence plate, the number begins with a 'P' (for private), while on taxis the license plates begin with an 'H' (for hired). This is because of the coding used on licence plates to distinguish private cars from taxis. In Trinidad and Tobago, illegal taxis are referred to as 'PH' cars. In Sweden, an illegal taxicab is called svarttaxi (black taxi), and is short for black market taxi. In Norway and Denmark, an illegal cab is called pirattaxi (pirate taxi). In Argentina, illegal taxicabs are called remises truchos (false taxis). In Mexico, illegal taxicabs are called taxi pirata (pirate taxi). In Madrid, Spain, illegal taxicabs meant for carrying drug addicts to the meeting point with drug dealers are called cundas (singular, cunda). In the Philippines, illegal taxis operating as Public Utility Vehicles (PUVs) without proper franchise are called colorums. In Malaysia, illegal taxicabs are called prebet sapu (sweep privates). In Hong Kong, illegal cabs are usually referred to as white card, due to the different licence plate appearance between commercial and non-commercial vehicles. In Lagos, Nigeria, illegal cabs are usually referred to as kabu kabu. In mainland China, illegal cabs are referred to as black taxis or black cars (й»‘иЅ¦), or alternatively blue-plate cars (и“ќз‰ЊиЅ¦), referring to the colour of the licence plates for private vehicles, rather than yellow for public service vehicles. The phrases vary by locality and often refer to different classes of licensed transportation providers. Other terms used are livery cab, car service, or jitney cab. Hacks or hackers is a common term that originated with the hackney horse, a breed of horse typically offered for hire in the 19th century. A variety of terms are used in the industry to describe legal and illegal transportation providers.

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