May 17, 2007:  Two-year old start-up, National Payment Card, offers the technology to use a driver's license in lieu of a debit or credit card.  Their system by-passes the traditional card payment systems, avoiding interchange fees.  NPC processes the payment as an e-check through the Automated Clearing House (ACH), a network most commonly used for direct deposits.

Consumers simply swipe their drivers license through a magnetic card reader and enter a PIN to complete the transaction. 

According to the company's website, www.nationalpaymentcard.com, their technology could be deployed through the 24 states that have a mag stripe on the drivers license including California, Texas, Florida and New York.

At present, however, NPC is piloting their patent-pending technology at a handful of gas stations in Central Texas, including Sam's Club which offers a $0.10 per gallon discount for using the drivers license instead of a debit or credit card.  Since January, the company has signed contracts to roll out the system to five regional convenience store chains beginning in June 2007. 

Although only 24 states currently issue licenses with magnetic stripes, NPC 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.  By 2010, NPC Chief Executive Officer Joe Randazza expects the system will be in place at more than 36,000 locations. 

While a $36 traditional credit card purchase could cost a gas station around 86 cents (or more, if it's a rewards card), NPC charges a flat 15¢ fee for each transaction it processes. That means that retailers using NPC's system can afford to pass along an instant discount to customers—creating what's in essence a self-funded loyalty program—while still coming out ahead.

Randazza estimates his eight-person company, based in Boca Raton, Fla., will be in the black by late 2008