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I think I'm missing something. Don't the police or whoever check the license number, name etc. against a central record? Is this just about the convenience of not carrying around a plastic card? I feel like there's more to it but I don't know what.
our id's have been in a digital database for some years now so this doesn't really change anything, this is just an option for the people that would prefer not to carry a wallet at all.
That's truly the only reason it exists.
As far as I know, patrol cars routinely scan the number plate of every car near them and do a license check automatically. The system will notify the officer if someone's license is expired/suspended/warrant for their arrest/etc. And if the officer does pull you over, they've often already checked your license by the time they walk up to your door.
Even before those existed, it was common practice to use a radio to ask someone back at the police station to run the number plate of a car before pulling them over.
I've had a cop refer to the owner of the car I was driving (e.g. my partner's car) by name when they've pulled me over for a random breath test/etc.