Business Administration Education Guide

Wednesday, May 16, 2007

Driver’s License / Gas Debit Card

Everyone is trying to save money these days. What use to be a silly ‘not worth it’ savings of fifty cents is now a rarely forgotten savings. Gas continues to roll back and forth between a few cents but constantly above three dollars. So when National Payment Card (NPC) created a new program that would allow gas savings, people took notice.

The new program doesn’t require customers to slip on yet anther key chain discount card, it instead uses the driver’s license. How it works: You set up an account by entering your driver's license number and bank account information online. After the account has been set up, account holders would be able to pay for gas by just by swiping the driver's license (linked directly, via the existing magnetic stripe, to the bank account), and entering a personal identification number.

The benefit for gas station owners is that NPC processes the payment as an e-check with the Automated Clearing House (ACH), a network most commonly used for direct deposits, participating retailers bypass credit card companies such as Visa and Mastercard. The processing fee is already attached to the account owner and isn’t applied to the gas station owner. The current processing charges add up to more than small change for gas station owners.

National Payment Card started piloting the patent-pending technology at a handful of gas stations in Texas this year. Since then the company has begun singing new contracts to start the system to five more regional convenience store chains later this year. By 2010, NPC Chief Executive Officer Joe Randazza expects the system will be in place at more than 36,000 locations.

While a $36 traditional credit card purchase could cost a gas station around 86 cents (or more), NPC charges a flat 15 cents fee for each transaction it processes. Randazza says the technology has applications in other industries, but for now the company is focusing on gas stations, where already-slim profit margins have been particularly hard hit by fees
Another reason for the current focus: It's one of the only markets price-sensitive enough that a few pennies off can count as a serious incentive for consumers.

In Texas, a spokeswoman for the state's Public Safety Dept. issued a statement advising that consumers use caution when providing any retailer with their driver's license number, and emphasized that the Public Safety Dept does not endorse National Payment Card or any other programs that piggyback on state-issued drivers' licenses.

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