Driver's License to be the Next Debit Card 394
prostoalex writes "Your US driver's license has a magnetic stripe with unique ID in it, and your debit card carries a magnetic stripe with account information on it, so why not link the two together and allow people to use their driver's licenses as debit cards? That's precisely what a young company National Payment Card is doing in select locations, according to Business Week: 'Gas-station owners are pleased with the program too. Because NPC processes the payment as an e-check with the Automated Clearing House (ACH), a network most commonly used for direct deposits, participating retailers bypass credit card companies such as Visa and Mastercard.'"
Sounds Neat (Score:3, Insightful)
It's not for me, but I can see where some people would like this. One less card to carry around and potentially lose.
bad idea (Score:5, Insightful)
I would like to be the first to say this is a really bad idea.
Re:So when your license is suspended... (Score:3, Insightful)
Oh, I'm sure there will be other results from the mishmash as well. Such as your interest rate going up if you get a ticket (I give the legislators just a little time to come up with that one.)
Identity theft is a bad enough problem... (Score:2, Insightful)
1. Give out name and address to complete strangers who work cash registers
2. Get identity stolen
3. Profit (for identity thieves).
Well, at least it fills in that elusive second step.
First step towards National ID (Score:5, Insightful)
As of today, driver's licenses and ID cards are state-specific. Layout, extra features (barcode, magnetic strip), anti-forgery techniques, etc are all decided on a state-by-state basis. If you move to a different state, you need to get a new license from that state within a certain amount of time (usually it's within a few weeks of establishing permanent residence). In order to roll out a nation-wide license-as-debit card program, either states will have to standardize on specific extra features like a magentic strip and what information is stored there, or licensing will have to be handled by the federal government.
As a believer in states' rights, this looks like nothing more than an end-run around opposition to a national ID program. If they can get people hooked on using their license as a debit card, nobody will object when the fed steps in to take control of licensing to make it "more efficient".
so why not link the two together (Score:5, Insightful)
Shall we enumerate some of the problems?
Suspended/surrendered license = no money
Hacked debit card = hacked license
numerous swipes = worn card + license. I'd rather not deal with the DMV any more than absolutely required.
What is the benefit for me? Nada.
Biggest Colossal Mistake (Score:4, Insightful)
Without the end-user being able to revoke a stolen card, the whole system is worth squat, security-wise.
And none of that clear-text personalized info on the magstrip, thank you very much, NO!
Re:bad idea (Score:1, Insightful)
Re:So when your license is suspended... (Score:4, Insightful)
How is the government colluding in this? Near as I can tell, it's just private enterprise.
"Your US driver's license" (Score:5, Insightful)
I see where this is going: National ID, financial account ... next is it medical data stored on same card?
Heck, this card will be TOO important! What if it is lost! Why, I can't be identified, buy or sell, get health care... you'd better just tattoo the damn number on my arm and forehead.
No, thanks.
You misunderstand the system: (Score:4, Insightful)
Now that depends on the debit card, doesn't it?
There's nothing to prevent this company, or one like it, from requiring a PIN to transact business when you identify via driver's license.
At least a debit card can be cancelled in the event it's stolen, even though by then it may be too late. How are you going to cancel your driver's license when the DMV is only open Monday through Friday 8-5?
By calling the "card stolen" hotline of N.P.C. and telling them to disconnect your license from your bank account.
Your driver's license is just being used as a key to a database. It's another way to go from a piece of plastic in your pocket to your name and account number - after that it's E-checks on your account with the E-check processing company.
The only real issue I see with this (besides people reading personal data off the plastic) is if the state doesn't make some distinction in the data on the license between a lost/stolen one and the replacement. Without that, once you've had ONE license lost or stolen you can't turn such a service back on for your new driver's license without re-enabling it for the missing one. (Of course you can change the PIN - presuming a PIN is required to use the service.)
Re:So when your license is suspended... (Score:5, Insightful)
Plus there are all these benefits:
1) You can identify where people are at all times
2) You can track every purchase everyone ever makes and where they make it
3) You can use the above to profile almost every action and behavior of every individual
4) You can shut off the ability to buy anything for alleged criminals and political dissidents
Sounds like a great idea. I only hope we can continue to move in that direction even faster.
Doesn't freeze account. (Score:4, Insightful)
Nope.
When your license is suspended it doesn't keep you from using it as ID. It just keeps you from driving legally.
All this system is doing is using your license as an ID to look up your account in the e-check processing service's database. This keeps on working until the service decides to stop accepting that particular license as ID. (Probably when it expires and/or is replaced with a new one.)
Pay the Speeding Ticket Immediately? (Score:5, Insightful)
Err... wouldn't that mean that you could pay a traffic fine immediately? Which translates to:
"Do you really want your state government having easy access to your bank account?"
"How fast will the state legislature pass a law requiring the immediate and direct payment of fines via the license/debit card?"
"A hold has been placed on your account for the amount of the fine. The hold will be removed if you are found innocent. Your court date is in 30 days."
Re:bad idea (Score:2, Insightful)
What would be interesting to know is how much information about you is kept on that magnetic strip? I imagine the licensing office only has some sort of binary hash on there that can be read as a straight number and applied to a debit account, seeing how each number would be unique. So even if someone managed to swipe that data, they'd still just have a unique number, not your actual identity.
Or, if they stole the card, they'd have your license, but not your PIN. You show me someone merging a driver's license and a credit card and then I'll go ahead and tell you where they can stuff that idea.
Re:Sounds Neat (Score:2, Insightful)
I was just referring to credit/debit/ATM cards, but you do bring up a valid point. When I was in school ~10 years ago, we had a credit card-sized ID that doubled as a bus pass and could also be loaded up with money to use in many on-campus stores as a psuedo-debit card. It was a different system that companies had to explicitly support, but most places that catered to students took the card -- book stores, cofee shops, copy shops, etc. The only places on- or near-campus that didn't were fast food (this was prior to fast food allowing debit/credit card payments) and bars. With a system like that, your day-to-day routine as a student could be as simple as your state ID/driver's license, your student ID, and an emergency credit card.
When I wrote my post, I was thinking back to when I clerked in a national-chain electronics store. We'd routinely see people come in with stacks of cards (all theirs, not scammed). There were people with three, four, even five different Visas and Master Cards, a Discover, an AmEx or two, and a whole bunch of store cards for various local places. Even back then, I only carried what I carry now -- state ID/driver's license, a Visa (since switched to Master Card by my bank, but the account is the same in terms of credit age), a Discover, and my ATM card (I've changed banks several times since then, but I still only carry one ATM card). I just couldn't understand how people could get into such a situation where they have so many different credit cards. Some people had them organized in nice binders, others kept them in their wallet wrapped with some paper money and a rubber band, but well-dressed or dirty they were pretty much the same to me -- debt-ridden people who either never learned how to manage their finances or just didn't care. Maybe I shouldn't have judged them like that, but the lesson has stuck with me for 12+ years -- you just don't need that much credit in revolving accounts. In fact you just end up screwing yourself by doing that, because all of that revolving credit will ultimately cause you to be turned down for a car loan or mortgage that you really need, all because you wanted a new pair of designer jeans and got a $5000 limit card in order to do so.
Progression (Score:4, Insightful)
Hey lets make our drivers licences national ID Cards
Hey lets make everyone in the World have ID cards that can be used as money which makes a world currency
Hey we're too lazy to carry cards anymore, lets have a microchip imbedded in everyone.
ACH network has no consumer protections (Score:5, Insightful)
This is very bad.
When you use a credit card, you get fantastic levels of consumer protection. By law, you're liable for at most $50 of bad transactions on your credit card, and most of the major payment backbones (Visa, Mastercard, etc) have reduced that to $0 liability over the Internet. There's no burden to reporting the charges as bad - you report the charges and go on with your life and you get a bright shiny new card in the mail in a few days.
On the ACH network, it's very different - it's like you're writing checks (the ACH network is used to settle checks). In other words, you're limited to the laws protecting you from bad checks, which puts the burden on you to prove that the charges did not come from you. Recovery of the money can be a nightmare, which can only be mitigated by the policies of your bank. The law offers you very little protection. Some banks are very good about this, others won't lift a finger to help you unless it's required by law.
Debit cards are bad, but at least their widespread use have made banks familiar with the issues. This is much, much worse.
Re:Sounds Neat (Score:1, Insightful)
Re:Sounds Neat (Score:3, Insightful)
MasterCard's Merchant agreement says:
If the card is not signed, the card acceptor must:
obtain an authorization from the issuer, and
ask the cardholder to provide identification (but not record the cardholder
identification information), and
require the cardholder to sign the card.
The card acceptor must not complete the transaction if the cardholder refuses
to sign the card.
Writing "ASK For I.D." or "See I.D." or "CID" is NOT a signature. A signature matches the person's name:
The signature would not match if the signature panel were
signed "Jan H. Hanley" and the sales receipt "Bob Hanley" or "F. Hanley." The
signature would be acceptable if signed "Jan H. Hanley," "J. H. Hanley" or "Jan
Hanley." The signature would be acceptable if a title such as Mr., Mrs., or Dr.
is missing or is included.
VISA says the same thing:
Some customers write "See ID" or "Ask for ID" in the signature panel, thinking
that this is a deterrent against fraud or forgery; that is, if their signature is not
on the card, a fraudster will not be able to forge it. In reality, criminals don't take
the time to practice signatures: they use cards as quickly as possible after a
theft and prior to the accounts being blocked. They are actually counting on you
not to look at the back of the card and compare signatures--they may even have
access to counterfeit identification with a signature in their own handwriting.
"See ID" or "Ask for ID" is not a valid substitute for a signature. The customer
must sign the card in your presence, as stated above.
Re:So when your license is suspended... (Score:3, Insightful)
What makes you think they'll limit this to a debit card? Credit cards are basically a license to mint money, debit cards aren't. So which do you think this idea will end up with? Remember: If they tie your license - a government issued thing - to your finances, you'll end up with the worst of both worlds. It's always that way.
Re:So when your license is suspended... (Score:1, Insightful)
Re:bad idea (Score:2, Insightful)
Re:So when your license is suspended... (Score:3, Insightful)
Plus there are all these benefits...
You forgot the most important one: the cost of implementing the national ID card will be measured in millions, possibly billions, and for the power elite who control government, spending tax money is simply good business.
There's a reason why the US government of today dwarfs the US government of only 50, let alone 100 years ago, both in revenue and power over the people -- and it's not because making government bigger is unprofitable for those in the business of government. Hell, even failure in government is typically rewarded with even more revenue and power. (With enough revenue and power, they can fix anything, right?)
Re: "An invisible berlin wall..." (Score:2, Insightful)
Sorry. We're not trying to keep people IN
The United States: Most immigrated to (legally or illegally) country in the world.
good for competition (Score:2, Insightful)
NPC is PayPal for MeatSpace (Score:2, Insightful)
The advantages to the merchant are (1) reduced transaction fees, and (2) reduced exposure to liability for stolen cards and other fraud. If someone steals your Visa card information and uses it to buy a bunch of stuff at a retailer, that retailer is left holding the bag when you dispute the transactions; the retailer has basically no recourse. If someone steals your checkbook or ACH information, the playing field is much more level. In the case of NPC, they are willing to eat all but $50 of any fraudulent charges that occur. This will make retailers happy.
From these two examples, PayPal and NPC, we can see how a number of new payment systems could work: You just get the customer's ACH info, tie it to some form of ID (retina, RFID, celphone, fingerprint, voiceprint, barcode tattoo, Number of the Beast, or whatever) and start raking in 1% of sales (which is preferable to the 3% merchants have to pay now for credit card services.) Note that PayPal charges 3% for their services, which they are able to get away with due to their status as an EBay property, and the ease of setting up a "merchant account." More and more companies are going to start moving into this market, just because the business model is so obvious. There has long been a pent-up demand for an alternative to the aging and clunky credit card system, and this might just be the crack in the dike that leads to a revolution in payment systems.