A Renewed Effort at ACH-Based Driver’s Licenses Maps Its Plans

A veteran of previous efforts to turn driver's licenses into payment cards is working with the operator of an online consumer-loyalty network on a plan intended to introduce automated clearing house transactions tied to shoppers' driver's licenses at brick-and-mortar stores by 2009. Linda Bryant, who has formed a processor called Pacific Network Access Inc., is working with Infinity Network LLC to introduce Infinity's real-time rewards system in stores in Michigan by Sept. 1. Consumers will use their driver's licenses to enroll in the program and accumulate what Infinity calls reward dollars with purchases. Bryant was an executive with the short-lived FastLane Secure Payments system, a program introduced in 2006 by Combined Payments Network LLC to allow consumers to pay for merchandise at the cash register with their driver's licenses, with transactions settled through the ACH. FastLane shut down last year as a result of its founder's illness, and Bryant went on to form New York City-based Pacific Network Access. Working with an unnamed marketing partner, Bryant and Infinity chief executive Eli Feder expect to roll out their program to stores in eight other states after the turn of the year and introduce ACH payments once consumers are accustomed to using their licenses for point-of-sale rewards transactions. Users' cards?which will likely be driver's licenses but could be other cards in the consumer's wallet, Bryant says–will be tied to their checking accounts upon enrollment in the program. “The key is to have the consumer wanting to swipe their driver's license or some other card at the point of sale because they understand what kind of gratification they get,” says Bryant. “We're rewarding consumers for new behavior [before introducing ACH debit].” Feder projects the program will reach about 3,000 Michigan merchants in its first year, and go nationwide within three years. He says he expects 3.6 million people will receive reward dollars by May 2009, up from 113,000 currently registered in the program. Both he and Bryant, though, see payments as the goal. “The growth opportunity is massive,” says Bryant. Feder says merchants that are seeing increasing shares of their sales taken by discount fees on bank cards will respond to a lower-cost electronic-transaction option. “Especially as you go into the multilane environment, there's a tremendous yearning to cut that transaction fee,” he says. The partners have worked out pricing schedule, he says, but will not disclose it publicly. To help support the volume of transactions it plans to process, Pacific Network Access earlier this month signed a contract with HBNet, a transaction-networking unit of terminal maker Hypercom Corp. Infinity, also based in New York City, buys products from suppliers, such as office-products purveyors and hotel chains, and allows consumers to partially pay for those products with the Infinity network cash. Members receive the cash rewards from employers or other parties. Infinity's revenue is derived from the difference between what the company pays for the products and what it collects from members after applying the cash rewards. Feder started the company two years ago and launched its first pilots last spring. The program currently works online only, but when it moves to physical stores consumers will be able to earn reward dollars by shopping at participating merchants. If those merchants elect to participate in what Infinity and Pacific Network Access call their global network, consumers will be able to spend their reward cash at stores belonging to other merchants in the network. The effort to introduce payments on driver's licenses follows similar initiatives launched within the past few years to try to win business from merchants whose objections to card-acceptance costs have become increasingly vociferous. Besides the ill-fated FastLane, National Payment Card, Coconut Creek, Fla., is also processing transactions on driver's licenses. Tempo Payments Inc., San Mateo, Calif., offers merchants a PIN debit card that settles through the ACH. And Revolution Money Inc., St. Petersburg, Fla., launched last year with a service that lets merchants take card-based payments at a fee of 0.5%, at least 100 basis points under what merchants generally pay on bank card transactions. Bryant says she welcomes the competition. “We're tickled pink there are other players out there dong the beta,” she says. “It's not coming from left field.”