Visa, MasterCard, AmEx... Driver's Licenses?

from the no-cash dept

Wed, May 16th 2007 12:38pm — Carlo Longino

Credit-card processing fees continue to be a growing burden for retailers, particularly in low-margin operations like grocery stores and gas stations. This is fuelling a lot of interest in alternative payment systems that seek to cut out credit-card companies, though they face formidable competition in the form of the cards' ubiquity and convenience. One company is seeking to overcome that by turning people's driver's licenses into debit cards (via Payments News). Users link their bank account to their driver's license number, and make purchases at participating retailers using the license and a PIN code. The service is already being used by some gas stations, who are very happy with it since the company charges a flat 15 cents per transaction, rather than a variable percentage, as credit cards do. The main sticking point is, of course, security -- with plenty of people hesitant to start using their drivers' license for payments, and authorities saying they don't endorse the idea. This may not be a perfect solution, but it does indicate the sort of system that will be needed to meet the demand for a payment alternative to credit cards. Since this change will be retailer-driven -- as the costs of payment processing are generally invisible to consumers -- any viable solution will have to offer benefits to consumers that are at least equal to those offered by existing payment mechanisms.

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36 Comments

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dorpus, 16 May 2007 @ 12:55pm

Microcurrencies
Sounds about as viable as the notion of "microcurrencies" that were all the rage in the 1990s. Back then, when politicians competed to say worse things about the federal government, small towns issued their fraudulent bank notes that local businesses promised to honor.
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Anonymous Coward, 16 May 2007 @ 1:05pm

Why not regular debit cards? Don't you have those in the US?
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- SPR, 16 May 2007 @ 1:09pm
  
  Re:
  "Why not regular debit cards? Don't you have those in the US?"
  
  This way illegal aliens can have full financial access.
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  - Anonymous Coward, 16 May 2007 @ 1:11pm
    
    Re: Re:
    But dont hurt yourself trying too hard to figure out how illegal aliens have drivers licenses
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    - SPR, 16 May 2007 @ 1:13pm
      
      Re: Re: Re:
      Believe it or not, some states here are giving them drivers licenses. This is in spite of the objections of the legal citizens.
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      - James, 16 May 2007 @ 1:27pm
        
        Re: Re: Re: Re:
        DUH... the ones who don't play by the rules are the ones who get to win. Shut up, pay your taxes and eat your grule!
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      - Anonymous Coward, 16 May 2007 @ 1:28pm
        
        Re: Re: Re: Re:
        Now if we can just get them the right to vote. I love how these replies spin as far from the article as it can get.
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- Jamie, 16 May 2007 @ 1:31pm
  
  Re:
  "Why not regular debit cards? Don't you have those in the US?"
  
  We do, but most people (customers) do not want to use them because they get charged exorbitant ATM fees by gas stations/retailers when they use them. Since most debit cards in the US double as Check cards customers tend to use check cards and run them at the retailer as credit rather than debit. When run as credit, the card behaves as a debit card to the customer, but the retailer gets charged a typical credit card fee.
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  - Ward, 16 May 2007 @ 1:35pm
    
    Re: Re:
    Yes, but debit charges are bank dependent. Majority of well-known banks don't charge their customers pinless/pin debit fees.
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- Debit Card Holder, 16 May 2007 @ 5:27pm
  
  Re: debit cards
  In the US there are mainly debit cards that are a dual card. They usually work with VISA or MC for any place that takes Visa, etc. However, they will also function as a 'debit' cards at places where there is a pin-pad and you see logos like star, plus, nyce, honnor, etc. This requires the user to enter in their atm pin number to complete the transaction. I believe that a 'debit' transaction shouldn't cost the stores as much money, because the money is being directly transfered, as opposed to VISA paying and then making sure that you pay them.
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Erik Curtis, 16 May 2007 @ 1:28pm

Re:
This would be great. No more need to show your DL when making a CC payment. I've seen that some CC companies are now using RFID to make it so that you don't even need to take it out of your purse / wallet.
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amed01, 16 May 2007 @ 1:28pm

I've heard of these pieces of paper that used to be used as currency way back when...I think they called them "checks"...i'll have to look into that.
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James, 16 May 2007 @ 1:30pm

But seriously...
...not gonna work. Besides the security headache, its gotten to a point now that if you don't accept credit cards you are going to forfeit my business.

I was in a bar in Las Vegas over the weekend and wanted to run a tab, he said "we only accept cash". I looked at him with that "did we move to a 3rd world country?" look. Needless to say that bar earned much less that evening (from me) than they might otherwise have.
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- Jamie, 16 May 2007 @ 1:34pm
  
  Re: But seriously...
  I agree. I can't count the number of times I would have bought something if the retailer had accepted credit cards but didn't end up getting anything because all the retailer took was cash. I simply do not carry cash beyond a few bucks anymore. Most times I don't even have that.
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  - bmojo, 16 May 2007 @ 2:37pm
    
    Re: Re: But seriously...
    My whole neighborhood/town in San Diego takes cash only. I used to think it was an inconvenience but now I love it if only for the fact that the credit card companies arent profiting from the local business. Plus it prevents me from spending too much money at the bars. But I have to admit, if the credit card machine at a gas station isnt working, ill get back in my car and drive to another before I go inside to pay.
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    - James, 16 May 2007 @ 2:57pm
      
      Re: Re: Re: But seriously...
      Most people only complain about credit cards because they use them improperly. If you have the discipline to use it as a REAL replacement for cash and pay it off ENTIRELY each month (on time), its more convenient and you can reap any rewards the card might offer.
      
      If you can't discipline yourself to do that, then stop blaming the cc companies and just pay cash. Done. I'll admit the cc companies have some reprehensible behaviors, but as far as I'm aware, if you pay off the balance entirely each month you'll never be exposed to that sort of thing. And, it will help build/rebuild your credit for a car or house down the road.
      
      For those suggesting the use of debit cards, thats a huge, huge financial risk on your part since its tied directly to your money. With a cc you are protected usually with ZERO liability, and the merchant is difficult you can even refute the charge.
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Jon, 16 May 2007 @ 1:33pm

Solution in need of a problem
Seeing how many places already take debit cards (plain ATM cards, not just Visa/MC check cards), this is not a current problem for most people. This system just encourages more of that, this isn't a problem for most consumers.

The only benefit is carrying one DL/debit card instead of two cards. This is far outweighed by security and privacy concerns, not to mention the roll of red tape required to implement it.
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Jon, 16 May 2007 @ 1:33pm

Solution in need of a problem
Seeing how many places already take debit cards (plain ATM cards, not just Visa/MC check cards), this is not a current problem for most people. This system just encourages more of that, this isn't a problem for most consumers.

The only benefit is carrying one DL/debit card instead of two cards. This is far outweighed by security and privacy concerns, not to mention the roll of red tape required to implement it.
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Jon, 16 May 2007 @ 1:33pm

Solution in need of a problem
Seeing how many places already take debit cards (plain ATM cards, not just Visa/MC check cards), this is not a current problem for most people. This system just encourages more of that, this isn't a problem for most consumers.

The only benefit is carrying one DL/debit card instead of two cards. This is far outweighed by security and privacy concerns, not to mention the roll of red tape required to implement it.
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Anon, 16 May 2007 @ 1:40pm

Default choice at checkout
I find it particularly annoying that once you are asked at the checkout stand whether you want credit or debit, the systems still respond with an "INPUT YOUR CODE" type of statement and if you do... you are right back to debit. You then have to ask the cashier how to go about getting where you already asked to go... to credit....

Credit card companies typically charge more for credit transactions than for debit card tranactions. So the machines are force feeding you to go down the debit path....

My two cents.
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chokeX, 16 May 2007 @ 2:11pm

the bad news is for states like new hampshire anyone can figure out your driver's license number by know your full name and date of birth
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Chris, 16 May 2007 @ 2:13pm

Pay by Touch!
At most of the grocery stores in my home town, they're using a system called pay by touch, where you link your checking account through your fingerprint. you just put your finger on the sensor and it charges your checking account!!! it's very cool but im not sure if there's any charge...like credit cards. I'd assume 'no'.
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John, 16 May 2007 @ 2:14pm

Anything that sticks to the CC companies
is fine with me. Credit Card companies have been making the rules and screwing both the consumer and the merchants for too long! We just got into a fight with an old credit card processor over a large charge back, which we paid and for our effort we're put on the "TMF" or terminated merchant file. For people that don't know what that means, it is a death sentence for a small business reliant on credit card sales to stay in business. The "TMF" is supposed to stop fraud by bad merchants but is used as a weapon against any merchant that argues with the processor. I say good luck National Payment Card take them to the boards!!
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Matt Bennett, 16 May 2007 @ 2:46pm

god, this doesn't help. I use (or used to use) my debit card as my main form of payment. But I've gotten wicked sick of the "Please enter your PIN" cuz they don't want to do it as a credit card, so I don't anymore.

See, my bank, Citizens, charges me $2 every time I do that, cuz it counts it as a foeign ATM. So it really, really, pisses me off.
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- Anonymous Coward, 16 May 2007 @ 7:07pm
  
  Re:
  I can't speak for any other merchants, but at the one I work for (with about 11,000 locations running this software) we'll force you to credit but if we want you to go debit, we say "enter PIN or press Enter for CREDIT" so it's pretty clear what to do.
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delivered, 16 May 2007 @ 2:51pm

I quit carrying cash altogether two years ago. By using my debit card on every single transaction I'm able to see exactly where my money is going at the end of the month. Plus I hate carrying change in my pockets.
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- Bav, 16 May 2007 @ 3:01pm
  
  Re:
  ...I wonder how anyone prior to this inovation ever tracked their use of money...???
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Jamfish, 16 May 2007 @ 3:13pm

Multi-pass!
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- Mike, 16 May 2007 @ 4:24pm
  
  Re:
  omfg awesome... Multi-pass!
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Tony, 16 May 2007 @ 3:38pm

from a retailer POV
I know for a retailer to accept credit card they have to pay monthly a merchant to beable to just run them, they then also need the hardware or software needed to read the card and send the data alone. then they also charge per transcation, and take a protion of the sale. it might be .10 for each transcation and then a % off of the total sale. so from a retailers angle it's cheaper to just accept cash..

the credit card company are just getting a cut at every single step of the way. also voiding and giving a customer credit you get dinged a charge.
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Some Guy, 16 May 2007 @ 3:43pm

In Europe, they use prepaid cards for small payments. It seems like that would work. Also what about paying via mobile?
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Brian Mason, 16 May 2007 @ 3:44pm

dl as debit cards
I feel this would be great if we only had a US drivers license. That way the government can make sure the security is being looked into at least.
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RandomThoughts, 16 May 2007 @ 4:46pm

Considering the lack of security retailers and others have, anyone who uses a card connected to their bank account is just plain nuts (or stupid.)

Its one thing to have $5K on your credit card statement (that you have not paid yet) but its another when you have $5K removed from your account.
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Alberto, 17 May 2007 @ 4:33am

octopus card
The most effective model I have ever come acorss for such transactions is the "octopus card" in Hong Kong - like the oyster card in London it is a pre-paid card embedded with an rfid chip which is used on public transport, in HK they have taken this a step further - it can be used in most cafe's, pharmacies, groceries, starbucks etc...

They have no processing fee, and actually enable to cut several costs as they leverage and scale on technology built for the transport system....
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Randall Shake, 29 May 2007 @ 5:46am

Driver's License as a debit Card
National Payment Card uses the Driver's License only as an access device to recognize a checking account. Their system uses an enrollment process very much like PayPal for enrollment. We utilize Triple DES of the pin pads for accessing the account. On the third wrong try we deactivate the account.

The ACH system is the same system used for collection of Mortgages, paying utility bills, and by the Card Association to clear payments between Banks. This is a Free Market attempt to mitigate the growing costs associated with payment acceptance for Merchants. See www.unfaircreditcardfees.com. Merchants offer Consumers a reward for using their Driver's License instead of a Credit or Bank issued Debit card. And they take their cash flow back from Visa and MasterCard.

This is not Big Brother at work. As it is voluntary on the part of Consumers. It can also be tied via a pin to multiple accounts.

Randall Shake
CEO
ACH PAY LLC
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cc card user, 22 Jul 2007 @ 10:33am

who accepts
went to the website couldnot find out who is currently accepting this method. Until acceptance becomes wide spread I wont be wasting my time signing up for this method
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