AUSTIN, Texas – National Payment Card (NPC) has found a way to convert driver’s licenses into debit cards — at least those state licenses that have a magnetic stripe on them, CreditCards.com reports. Currently, 24 states have licenses with a magnetic stripe.
NPC discovered how to go around bank-owned credit- and debit-card networks by instead processing payments via the direct deposit Automated Clearing House (ACH) network to gasoline stations and convenience stores for a much lower cost to the retailer.
According to NACS State of the Industry data, in 2007, convenience stores made less money — $3.4 billion — than they paid credit card firms for processing transactions — $7.6 billion.
“Because we charge a flat-rate fee of 17 cents as opposed to a percentage-based fee; instead of paying 10 cents a gallon for credit card fees, with us the merchant pays 1.7 cents,” said Joe Randazza, CEO of National Payment Card.
Convenience and petroleum retailers like the driver’s licenses as debit cards because it can use part of the money they save to give back to the consumer, typically 3 to 12 cents a gallon. “We change consumer behavior by rolling the price at the pump back three cents immediately,” said Randazza. “The merchant is then able to use the money they would normally be paying Visa or MasterCard to fund the (consumer's) reward.”
The NPC business model takes a low flat fee instead of a percentage of each transaction, allowing merchants to keep more profits. Thus far, only gasoline stations and convenience stores already using ACH network can participate in the program. However, NPC is gearing up to roll out a national program to turn loyalty and membership cards for other retailers into instant debit cards.