RFID and Automatic Identification Focus: Our Weekly Feature Article on Topics of Interest to those Using or Considering RFID or other Auo ID Technologies  
 
 
  - March 25, 2008 -  

RFID News: Biometrics Payment Company Ends Service, in Part as Consumer Privacy Concerns Slow Acceptance in US

  
 

Any Lessons for RFID? Customers will always Choose Convenience over Privacy, One Research Says; Where Does the Fingerprint Data Go?

  
 

 

SCDigest Editorial Staff

SCDigest Says:
The Pay by Touch failure could confirm US consumers are sensitive to privacy concerns that may be similar to some issues posed by RFID. Another question – where did all that fingerprint data go? Could another company buy Pay By Touch’s assets and acquire the biometric data? There may be similar concerns about RFID.

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Shoppers in stores across the country were surprised last Thursday to find that the service that enabled them to check out and pay for groceries with just a fingerprint was suddenly gone, as the company offering the technology closed its doors.

The day before, Solidus Networks, Inc., whose Pay By Touch division managed the biometric service, said on its web site that it “regretfully announced that it will no longer process biometric transactions on behalf of its merchant customers and consumer membership base, as of 11:59:59PM March 19, 2008.”

The company had filed for bankruptcy protection in December. As part of the company's restructuring, it was determined that the enterprise could no longer support the biometric authentication and payment system as it currently exists, based on lack of funding and current market conditions.

A number of retailers had deployed the system, ranging from giants such as the Chicago-area Jewel’s chain and SuperValu, to three-store chain Dorothy Lane Markets in the Dayton area.

The basic idea: customers that signed up had credit card data linked to their fingerprints. Upon checkout, all that was needed to pay was a finger on a biometric reader – no cash, credit card, or check required. Pay by Touch made a small fee on each fingerprint transaction.

There are mixed reports on the success of the system. Jewel’s has said more than 10,000 customers had signed up. However, some retailers have reported that in the US, customers have been in general leery of giving up their biometric data. Clearly, not enough customers were making fingerprint payments to keep the business going.

Several major theme parks, such as Universal Studios and Disney World in Florida and elsewhere, use fingerprint scans not for payment but to validate guests who purchase multi-day passes. This prevents customers from giving away or selling the passes to others for later days covered by the ticket.

(RFID and Automatic Identification Article - Continued Below)

 
 
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Any Lessons for RFID?

Privacy concerns have certainly been among the perceived barriers to RFID adoption in some retail applications, most notable as articulated by former Harvard University professor Katherine Albrecht, author of the book Spy Chips.

The Pay by Touch failure could confirm US consumers are sensitive to privacy concerns that may be similar to some issues posed by RFID. Another question – where did all that fingerprint data go? Could another company buy Pay By Touch’s assets and acquire the biometric data? There may be similar concerns about RFID.

However, observers note that biometric payment has proven very successful in Japan. Some here say it is also inevitable – Pay By Touch just ran our of money before the service could take off.

"Commercial biometrics is inevitable," said Paul Saffo, a Silicon Valley-based trend forecaster. "There are huge risks, but it's just so cheap and convenient, people won't be able to resist it. Whenever Americans face a choice between privacy and convenience, they always choose convenience."

As SCDigest has noted all along, the amount of personal data collected from credit card shopping alone probably makes most new data collected by RFID almost trivial.

What’s your take on the Pay by Touch biometric payment failure? Any lessons regarding privacy (resistance from consumers, data security) for RFID applications? Let us know your thoughts at the Feedback button below.

  
     
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