The driver was then attacked and robbed by the passenger and two other men, police said.
The cashbox and the driver's mobile phone were stolen.
Queenstown police urged anyone who saw people acting suspiciously near the recreation ground, in Robins Rd and Gorge Rd about 3.30am to contact them.
Detective Matt Jones said in a statement police were particularly interested in any sightings of a white sedan seen in the area at the time.
Mr Brown said the taxi's security camera footage was being reviewed.
''All our security systems worked, which I'm very happy about. We've got emergency buttons in all our vehicles and the driver activated that and from there everything happened as it should.
''Obviously, I'm very unhappy that it's happened because we've been going since 2007 and this is the first time one of our drivers has been attacked.
''... the last place I expected this to happen was Queenstown.''
New Zealand Taxi Federation spokesman John Hart, of Napier, said yesterday $700 was an unusually large amount for a taxi driver to carry. They usually had much less, firstly as a precaution against theft, but also because passengers often paid by debit or credit cards.
''Anecdotally, nationally, attacks on taxi drivers have decreased in the four years since security cameras were introduced,'' he said.
''The federation is obviously very concerned about any attacks on taxi drivers and it's to be hoped that the images available to the police from the security cameras will help to locate the offenders fairly quickly.''