You are here
BOCA RATON, Fla. -- Beginning next month, National Payment Card (NPC) will begin rolling out to convenience-store chains a system that enables consumers to pay for gas just by swiping their drivers' licenses and entering a personal identification number.
According to a report by BusinessWeek, consumers enter their driver's license number and bank account information online with NPC. The system then links the driver's license directly, via the existing magnetic stripe, to the consumer's bank account.
NPC started piloting the patent-pending technology at a handful of gas stations in Texas this January. Since then, the company has signed contracts to roll out the system to five regional c-store chains starting in June. By 2010, NPC Chief Executive Officer Joe Randazza expects the system to be in place at more than 36,000 locations.
Although only 24 states currently issue licenses with magnetic stripes, NPC said it can also add e-payment functionality to a chain's existing loyalty cards. One of the first contracts NPC signed was with Flash Foods, a convenience-store chain based in Georgia -- a state that doesn't have magnetic-stripe licenses.
Gas-station owners are pleased with the program because NPC processes the payment as an e-check with the Automated Clearing House (ACH), a network most commonly used for direct deposits. In doing so, participating retailers bypass credit-card companies, such as Visa and MasterCard, and their processing fees, BusinessWeek reported.
While a $36 traditional credit-card purchase could cost a gas station around 86 cents or more, NPC charges a flat 15-cent fee for each transaction it processes.
Guy Oliver of MTG Management, which manages three of the Texas gas stations where the NPC system is being piloted, told BusinessWeek that he's pleased to have some control over his spiraling credit-card processing costs. "With Visa and MasterCard, there doesn't seem to be any relief in sight," he said. "We pay more in interchange fees than we do for freight to get the gas to the stations."
Randazza said the technology has applications in other industries, but for now the company is focusing on gas stations and convenience stores, where already-slim profit margins have been particularly hard hit by rising credit-card interchange fees.
BusinessWeek noted that in Texas, a spokeswoman for the state's Public Safety Department issued a statement advising consumers to use caution when providing any retailer with their driver's license number, and emphasized that the department does not endorse NPC or any other programs that piggyback on state-issued drivers' licenses.
NPC, for its part, says its stringent security measures make the likelihood of fraud or identity theft very low. Customers' financial information is not stored anywhere on the license, and withdrawals are not permitted after more than three failed PIN attempts. The system also sets a maximum weekly limit of $300 in withdrawals, although Randazza said in the case of fraud, customers would only be responsible for the first $50.