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Texas, the state that lends its name to a popular variation of poker, Hold 'Em, has a different philosophy when it comes to cards in driver's wallets: Don't hold too many.

In fact, motorists in the Lone Star State need only hold on to one, lone card when they go to get gas. That is because a company based in Coconut Creek, Fla., makes it possible to use a driver’s license as a form of payment at select gas stations and convenience stores.

How Driver's License Charging Works
National Payment Card Association uses the magnetic stripe attached to some states’ driver’s licenses to turn it into a debit card linked to a customer’s checking account. Merchants who use this system are charged less than they would by large credit card companies, and then pass those savings on to their customers at the gas pump.

The company launched its service in June 2006 in the Austin market, and today partners with hundreds of merchants, most of them gas stations. (It plans to eventually expand to grocery and drug stores.) Currently 24 states have magnetic stripes on driver’s licenses.

Customers create their accounts by registering at, and use a PIN during transactions. According to the company, they’re only liable for the first $50 in case of fraud.

National Payment Card is not associated with any state or government agency, and financial information is not stored directly on the magnetic stripe, so a police officer checking your license after pulling you over would not be able to see any bank information.

Customers receive an e-mail after every purchase and get monthly electronic statements.

How it Saves You Money
National Payment Card Association charges a 19-cent flat fee to merchants instead of a percentage-based fee, typically 2.5 to 3% of the transaction.

“When gas was $4 a gallon, it was costing (merchants) 10 cents a gallon for Visa (Stock Quote: V) and MasterCard (Stock Quote: MA),” says Joe Randazza, National Payment Card Association’s president and chief executive officer.

When merchants are charged less per transaction, they can pass some of the savings on to consumers.

What People Are Saying
Customers seem happy using their driver’s licenses to pay for gas, says Subhash Puri, the manager of Everytime Grocery in Austin, which has been using National Payment Card’s system for more than two years.

Puri estimates the store does about $500 per day in business through the system, which is advertised by a big sign outside. Customers using their driver’s licenses get 10 cents off per gallon of gas.

The Risks to Consider
"There's no more risk or any less risk thank if you're using any bank debit card," says Randazza, the CEO of National Payment.

Still, consumers should know that the $50 liability limit is only a promise, not the law, says Ed Mierzwinski, consumer program director of the U.S. Public Interest Research Group, a Washington, D.C.-based advocacy organization. Credit card transactions are protected by the Truth In Lending Act’s $50 cap on consumer liability, while debit card transactions fall under the weaker Electronic Fund Transfer Act.

“In the case of a dispute with a bank, you’d at least have a regulator to complain to,” says Mierzwinski. “But I haven’t heard of any complaints.”

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