STORES Magazine - May 2008 - (Page 96)

NUTS AND BOLTS / BIOMETRICS Do Not Touch Demise of Pay By Touch a setback for customer-facing biometrics BY PATRICIA A. MURPHY Many industry observers are convinced that biometric authentication devices need multiple applications in order to be successful. Processing costs Biometrics also produced modest savings on payment-processing costs. Prior to installing the Pay By Touch technology, Green Hills didn’t have the capability to offer customers ACH or electronic check payments; as of early 2008, Hawkins estimates that 7 percent of Green Hills’ sales were processed through the ACH. Unlike credit card and many debit card transactions, where banks collect processing fees equal to a percent of payments, ACH payments clearing is priced on a per-transaction basis (typically 50 cents or less per payment). Nick Holland, a senior analyst at Aite, says the savings, while notable, aren’t sufficient to compensate most retailers for the time and money it takes to upgrade systems and procedures to support biometric payments. “Compared to existing systems at the point of sale, it’s just cumbersome, and the merchant has to pony up money to do it,” he says, and suggests that the best-case scenario for biometrics in support of payments would likely involve voice-recognition and mobile-phone technologies. From Hawkins’ perspective, the real value proposition with Pay By Touch arose from its integration with the store’s SmartShop loyalty program. “We drove a lot of biometrics use with the program,” he says, “far more than we did with payments alone.” According to Hawkins, “thousands of customers” were using Pay By Touch finger scanners for loyalty and payment applications at Green Hills. Yet when Solidus pulled the plug, “it was almost a non-event. All we lost was the biometWWW.STORES.ORG t was a novel idea: instead of fumbling for credit cards at the point of sale, a consumer simply swipes her finger across a specially designed scanner to initiate and authorize payments. Several supermarkets gave it a try, but in the end, it appears, the business was unsupportable. I Pay By Touch, the San Franciscobased firm that pioneered fingerprint-based payments at POS, was shuttered in March by its parent company, Solidus Networks: its scanners, installed at about 3,000 stores, were unplugged. “There was a window of opportunity that Pay By Touch had to scale and grow the system across the country. But I think that window is closing now, or already closed,” says Gary Hawkins, CEO of Green Hills Farm, a Syracuse, N.Y., grocery store that used the system. Pay By Touch terminals also could be found in several large supermarket chains, including those operated by SUPERVALU brands (a spokeswoman for SUPERVALU declined to comment for this story, except to confirm that the technology had been disconnected). Hawkins says the most disconcerting aspect of the Solidus decision was the timing: Stores received just 48 hours notice that Pay By Touch services were being discontinued, and this just days before the Easter weekend. In addition to running Green Hills Farm, Hawkins also advises retailers as president of Hawkins Strategic. That business came about following Green Hills’ 1993 launch of one of the first loyalty card programs in the grocery industry. The partnership with Pay By Touch was driven largely by efforts to further enhance Green Hills’ marketing success96 STORES / MAY 2008 es. Customers who were enrolled in the store’s SmartShop personalized loyalty program would touch a fingerprint reader upon entering the store and again at checkout to record their shopping activity. In exchange, each customer received the equivalent of a “personalized ad flyer” weekly, with coupons available online, via e-mail or at an in-store kiosk. And because the Pay By Touch platform also supported payments, the finger scan at checkout could double as the customer’s authorization for payment. Green Hills declined to reveal the metrics, but an analysis of the SmartShop program published in January 2007 by Aite Group estimated that 25 percent of Green Hills’ sales were made using finger scans. http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - May 2008

Stores - May 2008 Contents Executive Editor's Page President's Page Contrasting C-Level Compensation Across Segments What Shoppers Think 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Cover Story: Concepts That Clicked Concept2Watch Kiosks Artificial Intelligence Tech Support Online LPinformation Data Synchronization Human Resources Site Selection POS Selection Communications Biometrics Networking Systems Credit Loeb Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - May 2008

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