Paying for gas with your driver's license
Posted on Wednesday, May 16, 2007
Everyone wants a piece of the payment processing pie that is currently owned by Visa and MasterCard.
Technologies are being developed that will serve as alternative payment methods to the plastic in your pocket. For example, now instead of paying with a credit card at the gas pump, you might have the option of paying with your drivers license. I had a conversation today with Peter Guidi, VP of Sales for National Payment Card, who is pursing this technology.
They've built some technology that allows consumers to swipe their drivers license at the gas pump to pay for their purchase. The consumers checking account is then automatically debited. Retailers love it because they don't have to pay the 2% to 2.5% interchange fees to Visa/MasterCard and the issuing banks. Currently only 24 states have driver's licenses that have a magnetic strip so the opportunity is limited now.
However, as NPC continually refines the technology and can roll it out on a more seamlessly, they may very well become a viable alternative to credit cards. This is just one of a long list of companies trying to ease the strangle hold Visa and MasterCard have on the payment processing industry. For another example, see a recent article on Gratis Card.
In a competitive market place, whenever margins get too large, new entrants arrive to capitalize on the opportunity. That's exactly what's happening with the rates that Visa and MasterCard are charging businesses. The rates that businesses pay (see Where do credit card fees come from) to accept credit have steadily been climbing over the past few years and the total amount of fees is becoming significant.
Comments
Robert Crocker said on Thursday, May 08, 2008:
I definitely like this idea.
So how does merchant information processing system convert driver's license into a bank account number and then obtain authorization for fund transfer???
Now I'm wondering if there is someway to do this via a web page. Should be possible to add a card reader as a peripheral to any computer system. Problem is how does processor know the number was entered by swiping or by typing??? Even worse, it's much easier to find personal information associated with a driver's license than it is to find personal information associated with a social security number or a credit card number. Gotta be careful with this very clever idea.