Why $4.00 a Gallon is More Appealing to NPS

There's a company that came up with a nifty idea...at least it was nifty  when gas prices skyrocketed and gas station owners saw how credit card usage affected their bottom lines. 

According to  a story on CreditCards.com (How to turn your driver's license into a debit card)  they  have come up with a patent-pending process that allows consumers to use their drivers license (or any card with a magstripe) to bypass the national bank-owned credit/debit card networks (Honor, Star, Interlink and others) and offer debit card processing through the direct deposit Automated Clearing House (ACH) network to gas stations and convenience stores at a fraction of the cost.

I'll bet that National Payment Card is hoping that gas goes back up to $4.00 per gallon, because at that level, (IMHO) this program would have a lot more momentum.  Even their website uses the $4.00 per gallon comparison price point. 

My viewpoint is that at $1.60 per gallon, it doesn't quite have the stigma it would have at gas price levels we saw last summer.  Nonetheless, to go after a vertical with an ACH Decoupled Debit Platform, that uses any card with a magnetic stripe was/is an innovative approach after the Honor All Cards ruling in 2004, and if gas goes back up to $4.00 per gallon, then I'd look for this idea to be more appealing to petrol owners. 

Still, there's always Europe.  (oops, don't know if DL's have magstripes there)... In the US, less than 50% (24 states) use magstripes on the back of their drivers licenses.  (see map on right.)..the one's in yellow use magnetic stripes.  Still, the one's that do, make up 61% of total gas stations in the US according to their website. 

Still, I thought it interesting and innovative enough to share on the PIN Debit Payments Blog.  Here's some information on the program from their website:

National Payment Card is introducing a next-generation payment mechanism with the designation “Payment Card.” The National Payment Card substantially reduces your cost associated with "bank-networked" debit and credit card processing.

The Payment Card system provides consumers access to funds in their checking accounts so they may pay for fuel at participating locations. Editor's Note:  Once again, at $4.00+ a gallon there would be more of a willingness for gas station/convenience store owns to participate, but as of now, only a handful , well, six to be exact...are doing so...

The Payment Card is not a credit ordebit card that is linked through the national bank networks such as  “Honor, Star, Nice and Interlink."  The National Payment Card system can provide connectivity via existing payment processing networks or directly to the National Payment Card host services.Consumer authentication is via PIN at the pump.

How They Do It:

• The Consumer becomes aware of the program at the station through pump toppers and audio messages.
• The consumer enrolls in the program via the Internet, telephone or mail. The consumer's checking account information and consumer-selected PIN are the key elements of the enrollment data.
• At the time of tender, a consumer who chooses the Payment Card as a method of payment will swipe the Payment Card as a credit card. The POS application will prompt for a PIN and the transaction will be sent to National Payment Card for validation.
• The transactions are processed through the National Payment Card network.
• National Payment Card then performs an EFT on the accounts, collects the funds and credits the gas station operator’s account within 24 hours. National Payment Card bills once a month for the transaction fees.
• The entire process is computerized and automated with a solid audit trail. Reports can be sent by e-mail or viewed 24/7 on a secure VeriSign merchant web site.
• At a predetermined time each day, transactions collected by National Payment Card are batched to the ACH for settlement.
• The Payment Card is designed to be a traffic builder and loyalty program for your operators by providing consumers an immediate savings benefit while shopping.