Friday, September 22, 2006

PBT Lets Customers Pay at the Pump

A few Stop 'n Saves in Colorado are using new biometric readers that scan fingerprints, then charge customers' cards. Its maker says a 7-digit PIN keeps data secure.

By Kristi Arellano, Denver Post Staff Writer

When customers are asked to pay for their purchases at Stop 'n Save stores on the Western Slope, an increasing number of them simply give the finger. Index finger, that is.

Six of the 16 Stop 'n Save gas and convenience stores operated in Colorado by Feather Petroleum began using a biometric payment system this spring that links customers' fingerprints to their checking accounts. The system allows them to pay for their purchases without opening their wallets.

Feather Petroleum joins some 2,500 retailers in 44 states that use payment technology offered by San Francisco-based Pay By Touch.

Grocers including Piggly Wiggly in the southeast and several chains operated by Minneapolis-based SuperValu have adopted the payment technology, and 3 million people are registered for the service.

"Identity theft has become such a huge problem," said Bonnie Lightfoot, the company's director of human resources. "This is one way to help control that for our customers."

Customers at the six stations register by scanning their fingerprints and providing a voided check to the store. They can then pay for purchases by scanning their fingers and entering a 7-digit PIN number to verify their identities. Usually that number is their phone number without area code.

Feather Petroleum launched the technology in and near Grand Junction in March. It eventually expects to expand the system throughout Colorado to stores in locations that include Vail, Salida and Winter Park.

John Morris, president and chief operating officer of Pay By Touch, said the company expects to expand to additional Colorado retailers in the future. It has emerged as the top player in the biometric payment sector, snapping up its biggest competitor, BioPay, for $82 million in stock and cash in a deal that closed in January.

The company pitches its system as a way for customers to save time at the checkout line and for retailers to save money by avoiding fees charged by credit and debit-card companies.

Pay By Touch charges a per-transaction fee that is often as much as 60 to 70 percent lower than fees charged by credit-card companies, Morris said. Pay By Touch terminals cost about $300 each to install, and business operators can frequently recoup their investments within eight or nine months, he said.

Critics of the technology worry that it's not advanced enough for widespread retail use.

"A lot of people will buy into it based on convenience," said Lee Tien, a senior staff attorney with the Electronic Frontier Foundation in San Francisco. "But I think the jury is very much out on biometrics
as something that is going to have benefit in a lot of areas."

Morris said the combination of the fingerprint image along with the 7-digit identification number eliminates concerns about false positive readings, while false negatives are rare and quickly corrected. To protect its data, the company uses military-grade encryption.

"We take security as our top priority," he said.

While customers may express concerns about privacy, they may ultimately be won over by convenience, said Linda Elliott, a partner with Glenbrook Partners, a consulting firm that specializes in payment systems.

"People will tell you they don't want to give up biometric information. But talk to somebody with a couple of kids in tow, and they'd be thrilled to just slam their thumb down and be done," she said.

Lightfoot said some Stop 'n Save customers raised privacy concerns but came around after they received pamphlets detailing Pay By Touch's privacy and security procedures. More than 1000 people have signed up for the service since it was launched in March, she said.

Staff writer Kristi Arellano can be reached at 303-954-1902 or