A payment processor says it has figured out a way to let people with only a few dollars available in their deposit accounts use debit cards to pay for gas at the pump.
The processor, Paymentech Inc., has even coined a term for this: partial debit authorization. The idea is that instead of sending through an authorization request in the $30 range to cover a full tank of gas, the point of sale equipment would check out how much money the consumer had in the account and authorize the pumping of as much gas as the person could afford.
A Paymentech spokeswoman said the Dallas company has already begun offering the service at around 500 gas stations.
George E. Wilcox, Paymentech's group executive of product management, said that in the past when a customer swiped a debit card in order to pay at the gas pump, the gas station would send a request for around $35 to $50 to the cardholder's bank, enough to cover a typical fill-up.
If the cardholder did not have that much in the account, the transaction would be refused and the customer would drive off without making a purchase. Mr. Wilcox said that generally 3% to 5% of all such debit purchases are declined and since this has been the way the system has worked for some time, no one ever gave much thought to how much business might be driving away for want of a few extra dollars in their checking account.
Paymentech processes cards payments for thousands of gas retailers, including Shell Oil Co., USA Petroleum, and 625 locations of Mac's Convenience Stores, a U.S. subsidiary of a Canadian company, Couche-Tard. Indeed, the idea for the partial debit authorization service came from a gas station owner.
"We were talking with a customer who brought up debit declines as a big problem," said a Paymentech spokesman. The customer asked, "Isn't there a way I can get just $10 worth" on authorization?
Gas stations have been more aggressive in the past several years about offering customers the option of using credit and debit cards at the pump. ExxonMobil Corp. pioneered the concept of a wireless payment tag, called Speedpass, to let customers in effect carry a credit card on a key chain. More than five million of the cards are in circulation.
Now some gas stations are installing card-swipe readers at gas pumps to let customers use key-chain-size cards such as the Discover 2Go card from Morgan Stanley's Discover Financial Services.
"It is a very competitive marketplace," Mr. Wilcox said. "All it takes is one of them to get something, and they all have to match it."
But until the conversation with the gas station owner, Paymentech had not considered that it was a problem that some customers might have enough money in their bank accounts to buy a few gallons of gas rather than a tankful, he said. Once the issue was identified, it took only three weeks to solve, in part because Paymentech had already been offering a similar service to another client, which the company would not name.
Under Paymentech's system, if a customer's debit card is declined for the generic $35 or $50 request, the processor asks how much money the customer does have available. Whether $1 or $10, the pump will activate and allow the customer to pump that much gas - then the pump shuts down.
Mr. Wilcox said the debit rejection rate dropped around 10% at stations that have the new service. Those stations do not have to pay extra for it.
He said that Paymentech is a relative newcomer to the petroleum industry and has been active in trying to pick up new customers. He said to his knowledge, none of his major competitors have yet developed the capacity to offer this debit service. He said he suspected that those competitors, which include Concord EFS Inc., and ADS Inc., were probably scrambling to develop their own versions.
The same system might prove useful for quick-serve restaurants, Mr. Wilcox said.
He said he was not sure whether the innovation itself was enough to win Paymentech new customers, in the petroleum business or elsewhere. "It won't be the only thing" that sways a customer, he said. "But it will be a key thing. It represents our whole approach to the marketplace."
