Friday, August 31, 2007

More on Credit Card Fees and Gas Prices

The recent environment of high retail prices for motor fuels has put additional focus on the cost of payment transactions. While credit-card companies have not provided relief, ConocoPhillips has chosen to reduce processing fees temporarily to help our customers save money."

Below is a comparison of the regular fee structure vs. the temporary reduction:

Visa -- From 2.00% + $.10 per transaction to 1.90% + $.10 per transaction

MasterCard -- From 2.00% + $.10 per transaction to 1.90% + $.10 per transaction

American Express -- From 2.50% + $.10 per transaction to 2.40% + $.10 per transaction

Discover -- From 2.50% + $.10 per transaction to 2.40% + $.10 per transaction

In other news:

Chevron Corporation (NYSE: CVX) today announced that its subsidiaries Chevron U.S.A. Inc. and Chevron Credit Bank, N.A. reached agreements to sell their respective proprietary credit card businesses.

"The credit card business environment is changing rapidly," said Danny Roden, vice president of Chevron North America Marketing. "Consumers' usage patterns are changing and they are looking for new payment products and features. Our goal is to provide payment products that attract and retain consumers, marketers and retailers."

From the Washington Post:

Major credit card companies are reaping huge profits from rising gas prices because the fee that banks charge gas stations to process a credit card transaction is based on a percentage of the purchase price. As gas prices go up, the processing fee goes up.

Since last year, the fees that gas stations paid to credit card companies have risen more than 75 percent, right along with the price of gasoline.

"It's unexpected revenue, because people are just doing what they were always doing," said David Robertson, publisher of the Nilson Report, a credit card industry newsletter. "It's not like a whole new market opened up. There's no behavioral change. It's just more money."

And lots of it. On a typical day, Americans buy 382 million gallons of gasoline, according to the Energy Department's Energy Information Administration. About 70 percent of that is paid for by credit card, said several trade associations representing gas stations. The credit card processing fees paid by gas stations, meanwhile, average about 2.5 percent, these trade groups agree.

That is $183 million more a month, or nearly $2.2 billion dollars on an annual basis in extra money paid to the nation's banking giants just because of rising gasoline prices.

"The credit card processors and banks are reaping enormous profits right now," said Paul Fiore, director of government affairs for the Washington, Maryland, Delaware Service Station & Automotive Repair Association. "That's right out of the dealer's profit."

Fiore said credit card fees have become the top issue among gas station owners because they have not been able to raise their profit margins to cover the increased fees they must pay to the banks. Typically, a retailer's own bank gets 25 percent of the processing fee, while three-quarters goes to the bank that issued the credit card, said Robertson of the Nilson Report.

The fees are especially burdensome for gas stations, because their profit structure is generally fixed: Stations tack on anywhere from 7 to 11 cents a gallon to get their profit. That margin stays the same, or may even shrink a little, as prices rise, yet the station has to pay more each month to cover rising credit card transaction fees.

Marty Dustin, who manages the Burnt Mills Citgo station in Silver Spring that he and his father own, said rising credit card fees are rapidly eating up the family's entire profit from the business.

"We are not going to be able to make it on that 7, 8, 9 cents [per gallon] because there's more coming out of the back side," he said. "We're all going to have to try and grow our margins a little bit to make up the difference."

But so far, Dustin and others say, the price competition among gas stations is so intense that few stations have been able to raise their margin to make up the difference, or even part of it.

Adding to the difficulty for gasoline retailers is the fact that consumers are using credit cards more often for those costlier gasoline purchases. The National Association of Convenience stores says that since Hurricane Katrina, the percentage of gasoline purchases on plastic has gone up 10 points , to 80 percent.

Each oil company's own branded credit card charges its station owners lower fees, but those cards account for a small -- and decreasing -- percentage of sales at retail gas stations, said Daniel F. Gilligan, president of the Petroleum Marketers Association. Debit cards, too, have slightly lower fees than traditional credit cards but also represent a small portion, about 16 percent, of total card transactions, according to the convenience store association.

It is major credit cards offering frequent-flier miles and rebates that get swiped the most, by far, these groups say.

But there is growing pressure on the industry to rein in its fees.

The lead plaintiff in a class-action lawsuit against the credit card companies for merchant fees has seen a wave of interest in his case because of the gas-purchase profits.

"As gas prices have doubled, so, too, have the earnings for the banks that own the credit card associations," Mitch Goldstone said. "What I proposed to the CEOs of both Visa and MasterCard is to very simply suspend the interchange fees at all service stations."

He got no response, but he has chronicled his battle on his Web site,

Thursday, August 30, 2007

Pay By Touch has new Creative Services Director

Carin Castillo recently joined Pay By Touch. Here's some information from her site:


Carin Castillo has over 11 years of experience in Internet design, strategy and development.

Carin has recently joined Pay By Touch, a biometric payments start-up in San Francisco as their Creative Services Director, where she oversees all aspects of print, web and kiosk interface design.

To view an storyboard design for Pay By Touch in a flash animation: click here.

Prior to Pay By Touch, Carin was the Global Creative Director for Reuters Consumer Products, where she managed a team of 11 designers in the United States, UK and Japan.

At Reuters, Carin directed all aspects of design for Reuters’ websites, interactive television, mobile and stock tracking applications.As Associate Creative Director for ABC News, Carin oversaw the design of, which include national news programs such as 20/20, World News Tonight, Good Morning America, Primetime, World News Now and Nightline, as well as broadcast design for the ABC News Now Interactive Television Network.

She has also held director level positions at YouthStream Media Networks and and has designed websites, microsites and presentations for Teach for America, Woman's Day Magazine, Revlon, Bloomingdale's, Sun Microsystems, KIPP and Time Warner Cable.

As a pioneer and expert in the area of Internet advertising sponsorships, she has created successful campaigns for clients including Motorola, Compaq, Honda, Lowes, Citibank, Sony, Artisan Entertainment, Allegra and IBM.

Her work has received several prestigious design awards including three BDA/Promax Golds, a Telly for Television Animation, a Silver Horizon Interactive Award and two Astrid Awards for Outstanding Achievement in Design Communications.

Carin has served on the Board of Directors for the Association of Internet Professionals, has been featured in numerous publications regarding web site redesigns, has served on design judging panels and is an active member of the graphic design community. Carin holds degrees in Graphic Design and Visual Communications from the Art Institute of Fort Lauderdale. Teach for America, Woman's Day Magazine, Revlon, Bloomingdale's, Sun Microsystems, KIPP and Time Warner Cable.

Carin has served on the Board of Directors for the Association of Internet Professionals, has been featured in numerous publications regarding web site redesigns, has served on design judging panels and is an active member of the graphic design community. Carin holds degrees in Graphic Design and Visual Communications from the Art Institute of Fort Lauderdale.

Welcome aboard!

To look at some of her work, go to

Tuesday, August 28, 2007

Two Weeks = Positively Strong Numbers

In only two weeks time...

Dorothy Lane Market's biometric loyalty and payment service has already been used in transactions totaling 24 percent of sales, even though the program was launched only two weeks ago.

The concept behind Smartshop was strong, but the actual numbers, even after as short a period as two weeks has demonstrated that Pay By Touch may just have the most innovative loyalty program out there. Everyone seems to agree that personalized marketing is much more effective than mass marketing, and the ROI makes this a palatable solution.

Here's the Report from From Progressive Grocer:

Close to Quarter of Dorothy Lane's Sales Now Biometric, Only 2 Weeks after Launch

AUGUST 28, 2007

Dorothy Lane Market's biometric loyalty and payment service has already been used in transactions totaling 24 percent of sales, even though the program was launched only two weeks ago.

The system, San Francisco-based Pay By Touch's SmartShop, which went live for shoppers on July 25, has driven a 26 percent average redemption rate, as opposed to a 0.6 percent average redemption rate on FSI coupons, said the community-based independent widely known for its customer service levels.
Dorothy Lane is no stranger to loyalty programs, and its Club DLM is well known in the industry.

The SmartShop is an enhancement to the program.
"Previously, club members would get some mass offers and some personalized offers," Amy Brinkmoeller, Dorothy Lane's manager of information systems told Progressive Grocer.

"The SmartShop system enables us to give them relevant personalized offers every week."

According to the retailer, more than 36 percent of active shoppers - those who shop the stores on a weekly basis - used SmartShop.

One number Brinkmoeller, who spearheaded the SmartShop deployment, said she is particularly happy about is the number of users now paying via ACH through the Pay By Touch system.

Transactions totaling 6 percent of sales were paid for using SmartShop.
"The acceptance of payments by e-check is significant for us," said Brinkmoeller. "Transaction fees are generally very high for us, and this will help lower them." -- Joseph Tarnowski

How Pay By Touch Can Put a Tiger in it's Tank

Awhile back, I posted about how Gas Stations were ripe for ID theft, and mentioned how Pay By Touch could not only solve that problem, but just as importantly, save them tons of money by offering to replace credit card transactions with checking or ACH debit reward transactions. But I never really did get into any detail. I will today.

I found an interesting article detailing how gas station owners /operators are becoming increasingly discouraged by accepting credit cards, and thought that now was as good a time as any, to take and explain my ideas as to why and how Pay By Touch could be a godsend to these owners/operators.

I'll just touch on some of the points, as I tie in the less expensive ACH Debit, with a loyalty program administered by Pay By Touch which refocuses on the niche that S&H GreenStamps carved out with Gas Stations years ago. It would be a good blend, and would result in a win-win situation for everyone involved.
There's a tremendous opportunity for Pay By Touch in this arena.

The article is below...I interrupt it several times (always in green) in an attempt to either educate, make a statement or have fun with a sarcastic comment in an attempt to prevent myself from becoming bored doing this blog...

Gas stations discounting cash sales


Americans love their credit cards. But at more and more gas stations, it pays to use cash. In Costa Mesa, Calif., Craig Hummel pocketed a 12-cent-a-gallon discount recently for using cash at a Valero station instead of his Visa or MasterCard. He bought 9 1/2 gallons of premium for his Mercedes sport utility vehicle and saved $1.14.

"I know a lot of people just go wherever they want for gas ... but I only come here," Hummel said. "Over a year's time, you save quite a bit. I think more stations should offer it." (Ed. Note: Proof that loyalty exists in regards to consumers for gas stations)

They are. To dodge the rising fees that credit card companies tack onto transactions, both no-name and big-brand stations are charging drivers less when they buy with cash.

The Valero station favored by Hummel was offering self-serve regular for $2.97 a gallon for cash and $3.07 on a credit card a few weeks ago. Not far away, a busy Shell offered a 6-cent cash discount for regular.

Francisco Galicia, the manager of that Shell, said he had been offering cash discounts of 4 cents to 6 cents a gallon for six months. At first, customers had questions, Galicia said, but now "they understand why I'm doing it ... and they're responding." Fees vary, but on a typical credit card sale,

Galicia's station pays 10 cents plus 2 percent of the purchase price to the credit card company.

Editors Note: Here's as good a time as any to discuss how this 10 cents plus 2 percent creates an opportunity. First of all, the 2% is mentioned after the 10 cents, in order to create the illusion that the 2% is inconsequential. In reality, the 2%, at $3.00 per gallon is closer to 65%. I'll "touch" on that in a bit. Let's start here...

Gas station owner/operators have the same per gallon profit, whether gas costs consumers $2.00 or $3.00 or even $4.00. With that said:

When gas was $2.00 per gallon, 20 gallons cost $40.00.

2% was .80 cents + .10 cents. or .90 cents.

That's 4.5 cents per gallon to Visa/MasterCard.

Assuming a gas station operator makes 10 cents a gallon, (that's high, but it's easier for me to do the math in my head...) after paying the credit card fees, the profit is split 55/45.

The owner/operator gets only 5.5 (.055) cents per gallon at $2.00 because, Visa and MasterCard is earning 4.5 cents. (.045) of .10 cents.

That's a staggering 45% of the .10 cent per gallon margin.

Gas is no longer $2.00 per gallon so let's do the math at $3.00 per gallon.

When gas is $3.00 per gallon, the same 20 gallons cost $60.00 instead of $40.00.
2% of $ 60.00 is $1.20 + .10 cents. or $1.30)

Instead of .90 cents, it costs $1.30

That's .065 cents per gallon to Visa/MasterCard out of .10 or 65% of the profits.

As I mentioned, the gas station operator's profit, remains the same per gallon from their supplier, regardless of whether it's $2.00 or $3.00, but now, because of credit card fees, it has been reduced from 5.5 cents to 3.5 cents per gallon. The owner operator is being punished and the credit card companies are being rewarded, and nothing has changed except the price per gallon of gas!

Thus, instead of a 55/45 split in favor of the owner/operator at $2.00 per gallon, it now becomes a 35/65 split in favor of Visa/MasterCard at $3.00 per gallon.

The result is a 37% reduction in profit from the $2.00 per gallon price point to the $3.00 per gallon price point for the owner/operator. Of course, Visa will spin this into "It's only 2%!"

That hardly seems fair does it. Almost criminal and worthy of being looked into by the FTC. Wait, until you read about the $5000 a day fine Visa threatens when an owner/operator tries to offer a discount for cash...

Getting back to the breakdown of 3.5 cents to the owner and 6.5 cents to Visa/MasterCard, one could certainly understand why gas station owner/operators are becoming increasingly irked at the credit card companies.

Do the math at $3.50 and $4.00 per gallon and it becomes even more disproportionately unfair to the owner/operators.

This is where Pay By Touch can be of great assistance and help these owner/operators"... Now this is not as complicated as a Shell game, but you will need to follow where I'm going with this compelling argument, so here we go...

Instead of charging 2% and .10 cents Pay By Touch could charge a flat fee of .50 cents per transaction, still make a respectable profit, and insulate the owners from rising gas prices, and themselves, from competitors.

Gas would literally have to drop to $1.00 per gallon (20 gallons x $1.00 = $20.00 X 2%= .40 cents, plus .10 cents = 50 cents) in order for the credit card companies to be competitive with Pay By Touch on a 20 gallon fill-up.

On the flip side, at $3.00 per gallon, the owner/operator still pays only 50 cents to Pay By Touch for 20 gallons, thus instead of "Shelling out" 6.5 cents per gallon with a credit card transaction, they would pay only 2.5 cents per gallon. Kind of a nice touch, wouldn't you say? Therefore under the same 10 cent per gallon scenario with a 20 gallon fill-up they would EARN 7.5 cents per gallon instead of 3.5 cents.

That's 66% more profit for the owner/operator!

Kinda gives a new meaning to the Phillips 66 logo on the left, doesn't it?
Plus imagine the loyalty that Phillips 66 would create with their owner/operators for providing the Pay By Touch service as a form of payment, thus increasing their profits without increasing their workload. In addition, they could get into the "Mobil payments industry" right out of the tank. Pay By Touch would still earn 25% of the gasoline profits, albeit far less than the 65% that Visa is currently making. But is that a bad profit. I think not.

Back to the article... because they touch on several more interesting points.

Customers pay, too.

In 2006, motorists -- whether they used cash, credit or debit cards -- paid an average of 4.2 cents a gallon more because of credit card fees, said Jeff Lenard, spokesman for the National Association of Convenience Stores, which represents outlets that sell about 80 percent of U.S. fuel.

Profit drain

Complaints have grown because money collected through card fees has more than doubled since 2001, and rewards programs have led people to use credit for everyday purchases.

For gas stations, soaring prices have magnified the percentage-based card costs and caused more customers to pay with plastic. (Ed. note: Yeah, that's what I said)

"What's happened is a double whammy," said David Robertson, who publishes the Nilson Report, a credit industry newsletter.

Members of the convenience store group, which has sued credit card companies over the fees, paid $6.6 billion in credit card fees last year, but booked only $4.8 billion in profits, Lenard said.

(Ed. Note: I'm aware that I said 65/35 profit split, and the 6.6 to 4.8 numbers are off from my example, but it's because not all gas stations make .10 cents per gallon profit, and those numbers include profits from food/drinks/car washes etc. where the owner/operator has a higher profit margin than they do on gas.) point remains significant which is that...)

"The credit card companies made more at our stores than our store owners," said Lenard.

(Ed. Note: The Sales Proposition seems to be as simple as letting store owners know that are aware of the problem and we address it and allow store owners to make more money than they do using their existing payment platforms)

Dealers say the problem is at its worst in California, where gas prices have been higher for longer and lengthy commutes mean drivers fill up frequently. (Ed. Note: Filling up more frequently doesn't have anything to do with it, higher gas prices do.)

Wording dispute

Oil companies have played a role too. Chevron Corp., Exxon Mobil Corp., ConocoPhillips and others have offered rebates and promoted branded credit cards to lock in loyalty.

(Ed. Note: I have an suggestion/idea... How about Gas Stations utilizing a loyalty program offered by Pay By Touch, (as we seem to have some experience there) and now that we've purchased S&H, we could implement an updated plan using Greenpoints. (S&H was pretty big with gas stations at one time...)

One about consumers being able to earn points to eat at restaurants, which complain about the business slacking off because of the high gas prices. There's something about nostalgia/loyalty and coming from help that always seems to have an attraction. And, it just so happens that S&H already offers the Dining Connection Rewards Platform. How "convenient"

Another angle, tie in Greenpoints with our grocery store clients. It would strengthen enrollments at both, and result in strengthening the Greenpoint program itself.

GreenStamps were huge not only at
Gas Stations..but also Grocery Stores...(from Wikipedia)

Auburn, Calif.-based Nella Oil racked up $5 million in credit card fees last year at its 50 Northern California gas stations, said Thomas Dwelle, a partner in the family-owned business. This year, Dwelle launched a cash discount program at a few stations -- and landed in hot water with Visa.

The card company accused Nella Oil of violating its Visa contract by using the word "credit" on its price signs. Visa threatened to charge the company $5,000 a day (Ed. Note: Isn't the 65/35 split enough for them, resulting in $5 million) and cut off the stations' ability to take Visa credit cards. (Ed. Note: Sounds like that would create even more opportunity for Pay By Touch...)

It demanded that Dwelle use the words "regular" or "standard" rather than "credit" to differentiate the higher price from the cash cost. (Ed. Note: Does Visa have a clue?)

State regulators said Visa's recommended signage would confuse customers and violate California law. Visa backed off.

Visa USA declined to discuss the dispute. Visa Vice President Rosetta Jones said in a statement that a cash discount "is confusing and naturally implies a surcharge for payment card transactions.

(Ed. Note: Yes, but of course using the word "regular" at a gas station wouldn't be confusing at all, would it. I would suggest that, if stations offered a discount for using Pay By Touch, then it would "naturally imply that Visa's surcharge is overtly higher than it needs to be.)

She went on state: "People who use credit cards "should not have to pay what amounts to an unfair checkout fee."

(Ed. Note: Is she insane? Taking credit cards should not result in merchants, who last time I checked, were also "people" too, having to pay what amounts to 65% of the profit. Does Visa even realize how ridiculously hypocritical they sound? Luckily for them fewer people understand the credit card industry and basis points than understood how ARM's worked when they took out their subprime mortgage.

How hard could it possibly be to get these frustrated gas station owner/operators on Pay By Touch's side. en masse). The spillover of owner/operators to Pay By Touch would make the Exxon Valdez look like an oil drip from an ATV on a driveway...

The article continues...

Travis Plunkett, legal director at the Consumer Federation of America, likes the trend toward cash markdowns for fuel.

"It is something that dealers should be freely allowed to pursue, with no coercion on the part of the payment systems," Plunkett said.

Conclusion: If Pay By Touch can make store owner/operators understand that they can increase their profits by 66% on a 20 gallon purchase, using Pay By Touch, the pressure they would put on their supplier would be tantamount to having lobbyists working for us in D.C.

If we could make the oil companies understand how we could reinvent and reintroduce the S&H program and tie it in to a platform that would reward their customers, increase loyalty, increase profits for the owner/operators, and make the transaction significantly more secure (remember Ripe for ID theft) then what do you think would be the result?

In addition, Pay By Touch would accelerate the transaction times, and make them more convenient by having the stations installing Pay By Touch at the pumps. How many times have you waited at the pump while someone goes inside and waits in line to pay. And it sure takes them a long time to come out with their coffee and donuts while I wait at the pump.

Might even get a few enrollees out of it too. Could even strengthen the existing S&H platform. Oh, and they wouldn't have to be threatened with paying a $5000 a day fine or be bullied by Visa into having their livelihood taken away. Which is B. S. anyway, unless they would cut off a company that paid them $5 million last year in fees. Sounds like opportunity staring us in the face while Visa bites off their nose to spite theirs.

Add in a personalized marketing loyalty program using the power of S&H's nostalgic impact, include a Citibank debit card under our partner Discover, and Pay By Touch could have a gas with the possibilities...

Monday, August 27, 2007

Article on SmartShop Personalized Marketing Kiosks

In an article from the Charlotte Observer Sunday, they talked about Pay By Touch's SmartShop program and loyalty programs in general. As I've mentioned in past posts, the idea behind SmartShop is that people are loyal to brands, not stores, and SmartShop gives the opportunity for shoppers to save on the brands they buy, rather than competitors brands, which is has been the basis behind coupons since day one.

Here's the article:

We just know you'll love this, Ms. Loyal

Grocery stores are using technology to zero in
on what products you really want, not what they want you to buy

Loyalty cards are going higher-tech.

Popularized in the 1990s and now a fixture on American keychains, the cards have for years been used by retailers as a way to gain insight into their customers' shopping habits. In return, shoppers are given discounts on store merchandise.

Now, some retailers are tapping the technology associated with the cards to increase sales and better serve shoppers.

San Francisco-based Pay By Touch says it has plans to bring loyalty card kiosks to some N.C. grocery stores in November. Similar kiosks will eventually be appearing at Charlotte-area CVS pharmacies.

The kiosks allow shoppers, as they enter the store, to receive custom coupons by scanning their loyalty card or fingerprint. Typically, customers get their coupons as they leave or in the mail, and many forget to use them, said Shannon Riordan, vice president of marketing for Pay By Touch.

Riordan said the system is so good at predicting what products consumers will buy, about 40 percent to 50 percent of the kiosk coupons are redeemed, compared to about 1 percent of traditional coupons sent at random.
One reason is that the store doesn't try to get consumers to switch brands, a tactic common among loyalty programs.

Traditionally, if a store notices that a customer regularly buys one brand of orange soda, the store will offer the customer a coupon for the competitor's orange soda. That strategy frequently fails because people are loyal to brands and are reluctant to switch, Riordan said.

"What we do instead is give them a coupon for the soda they already want," she said. "The store sees an increase in sales, and the customer gets what they want."

The company, which does business with several local grocers, isn't yet saying which N.C. stores will receive kiosks. (Ed. Note: Piggly Wiggly will call the program "The Perkolator"

CVS Caremark Corp., the nation's second largest pharmacy chain, announced in July that it would be rolling out nationwide including Charlotte. But the company has not yet released details on when Charlotte will receive the devices or what company it is using.

The interactive coupon kiosks will allow customers to receive money-saving offers based on previous purchases using their ExtraCare loyalty card.

CVS customer Rusty Trout of Huntersville said he uses his loyalty card every time he shops. But he questions whether the buy-one, get-one-free offers he sometimes receives with his card are worth it.

"I guess what I would really like to see is all around generally lower prices for everyone and fewer specials and give-aways," Trout said via email. "Purchases involving multiples are not worth the savings if we cannot consume ... things before they go bad."

About two-thirds of retailers have some form of loyalty or rewards program, according to Jupiter Research. Discounters such as Wal-Mart, Target and Family Dollar keep prices low all the time and don't use loyalty cards.

Among grocery stores, about 45 percent have such a program -- a number that has remained relatively steady over the past five years, according to the Food Marketing Institute. Some grocery stores that have loyalty programs say about 85-90 percent of shoppers participate.

Stores have embraced loyalty cards because they provide detailed information about shopping habits. Every time a customer uses one, the retailer records items purchased and how much was paid.

"Some of the most innovative companies are identifying exactly which products customers want and are targeting their most loyal customers," said Bill Greer, spokesman for the Food Marketing Institute.

Critics of loyalty programs question whether stores adequately protect the information they gather from shoppers. Others don't like the idea of a grocery store keeping close track of what they're buying. But most would welcome getting discounts based on what they want, rather than what it suggested by mass mailings.

Shoppers such as Denver, N.C., resident Tom Hodge see the cards as a convenient way to save money without clipping coupons. Hodge estimated he and his wife carry about 15 to 18 store loyalty cards.

"I believe they do this in an effort to provide better service and better products," he said. "I don't see anything wrong with them knowing what I'm buying -- it's not like I'm buying in a shop full of illegal products. It's just lettuce."

Experts say many retailers have been collecting data, only to let it sit unused. Retail observers say that's why Albertsons LLC, a grocery chain based in Idaho, ditched its loyalty card program in June.

"If you have all this information and you're not really doing anything with it, then what's the point of having it?" said Brian Woolf of the Retail Strategy Center in Greenville, S.C. "These programs cost money."

In Charlotte's grocery market, Harris Teeter, Food Lion, Bi-Lo and Lowes Foods are the main stores offering loyalty programs. Harris Teeter, the leading grocer in the region, said it's evaluating loyalty card kiosks, but doesn't yet have any in stores.

Bi-Lo runs daily and weekly reports on the data it collects, said John Conroy, the company's senior card-marketing manager. The information helps the company see whether it's gaining or losing customers and gives clues on how to serve them.

"We use the data to help select the right items to stock -- stores with a higher affinity for natural or organic foods will carry more of these items than others," Conroy said via e-mail.

Besides the daily discounts on merchandise, stores also use the data to identify and reward their most loyal customers.

"They are offering free turkeys, Christmas trees, birthday cakes -- anything to make these loyal customers feel special," said Greer. "It's a strong marketing tool."

Shopper Christy Holden said she and her husband once won a free cruise by using their Harris Teeter VIC cards. Holden said she also frequently uses Lowes Foods loyalty card, which rewards points that can be used to save money on future purchase.

Woolf praised Harris Teeter, noting the company is one of the few stores using its loyalty program to target shoppers via e-mail to give them customized offers.

The e-Vic program has been in place since 2003. Harris Teeter does not disclose participation levels. Lowes Foods also offers an e-mail service associated with its rewards program.

"In our area, Harris Teeter does the best because they are using that information to provide a great service," Woolf said. "That to me is pure genius."

About Pay By Touch

Founded in 2002, San Francisco-based Pay By Touch is the leading provider of equipment that allows shoppers to pay for merchandise using their fingerprint.Pay By Touch has payment programs in Piggly Wiggly, Lowes Foods and Harris Teeter stores. It also has check cashing systems in Bi-Lo stores, and manages loyalty card programs at retailers such as Food Lion and Winn Dixie.

This year, Pay By Touch says it will roll out loyalty card kiosks that allow customers to use their fingerscan or loyalty card to get coupons as they enter the store.

Loyalty Card Programs

Stores collect personal information about individual purchases and aggregate data about their overall customer base. Bi-Lo had the most detailed privacy policy of the stores we reviewed, explaining that they collect date of purchase, items purchased and total dollar amount. Harris Teeter's policy is shortest, but asks for the most amount of information to sign up. Here's a synopsis of privacy policies at area stores.


Signup requests name, address, e-mail address and phone number.

Does not sell or rent personally identifiable information to third parties, but may "share" personal information with companies hired to perform functions such as processing rebates, conducting research or other operational assistance. Also will release if required by a judge or to comply with a subpoena or other legal claims.

Aggregate data, which does not include personally identifiable information, may be shared with third parties in order to allow them to evaluate the effectiveness of programs.


Signup requests name, address, daytime and home phone number, e-mail address, signature and a driver's license or state identification card. Form says the ID is used for "internal customer service use."

Personal information "not given to anyone" outside Harris Teeter.

Policy doesn't explain what happens to aggregate data, but says the company uses customer purchase records and "other information" to offer special promotions or coupons to customers.


(S&H administers the program, which is now Pay By Touch)

Signup requests name, address, e-mail address, phone number, date of birth and number of people in household.

Personal information is shared only with third parties to perform services for the company or determine whether customers are eligible to receive special offers. The company takes steps to ensure the third party doesn't disclose personal information or use it for any other purpose. Information also may be released to comply with legal proceedings.

Aggregate statistical information is shared with "participating merchants, advertisers or other third parties."

Friday, August 24, 2007

Who's on First?

In my last post, I "zounded off" on my "personal" opinion regarding the performance of John Costello at Pay By Touch. (and

Here's the announcement regarding his new position posted in the Arizona Republic:

Mesa-based Zounds Inc. appoints new president

Arizona Republic Aug. 23, 2007 05:09 PM

Mesa-based hearing-aid maker Zounds Inc. announced marketing expert John Costello as president and CEO. He succeeds the founder and CEO Sam Thomasson, who will remain a vice chairman and director. In April, Zounds received an additional $30 million in capital through Signature Capital and private investment.

Costello's experience includes working for biometric company Pay By Touch. With Home Depot, he worked on the "You can do it. We can help," campaign, and with Sears, he assisted on the "Softer Side of Sears" campaign.

Wednesday, August 22, 2007

Pay By Touch PKV Racing Screensaver and Bah-bye

What a nice looking car. Click the picture for a high resolution larger picture. (1600 x 1067)

It's Touch and Go

By the way, I'm hearing from my grapevine that John Costello, who, in my humble opinion has been a bust at Pay By Touch, (maybe he couldn't quite put a finger on how to market biometrics) is taking a CEO and director position at a hearing aid company. "Zounds" good to me!

How can someone with the contacts he supposedly has not bring in business? I don't remember blogging anything about Sears or Home Depot piloting Pay By Touch, both companies where he had (at one time) a lot of pull. With all due respect to Mr. Costello, I'm extremely miffed in his lack of performance. I can't believe I'm alone, because if I am, then I'm even more miffed that he took the position for only a few months until a CEO position presented itself. Who the heck is Zounds anyway. Zounds like Pay By Touch helped him save face and asked him quietly to resign. My common sense dictates that someone of his background and reputation, would NOT have planned on this.

If that's not the case, then I would think that if a CEO position is the only thing that satisfies his ego, then he should have considered having waited for one to present itself instead of using and stringing along PBT until he "heard" about one. Either way, this is NOT Hall of Fame Marketing behavior.

Hears to ya at your new job. Wish he could've lived up to expectations (and reputation) at Pay By Touch, but either nobody heard what he had to say, they weren't listening, or he believes in the "softer side" of getting the job done. Regardless, a hearing aid company sounds like a good fit for a "senior" executive. What a disappointment! Hall of Fame? Heck, he didn't even hit the Mendoza line with Pay By Touch, and not a single home run to boot.

Frankly, I had my doubts about Mr. Costello, when he had sports legends/icons Michael Jordan, Wayne Gretzky and John Elway behind him (along with millions of their dollars) during the dotcom heyday and he could NOT make work. How does that happen?

Now, that the naked emperor who has no close has been exposed, let's bring in someone who knows how to market this company...internationally. This company should be tearing it up. They have an unmatched patent portfolio virtually no competition and a free product for consumers that saves retailers tons of cash. Oh, and it's more secure than existing payment mechanisms. Doesn't sound like a hard sell to me. Marketing has always been overrated when compared to sales. Branding is for cattle. Sales make the world go round.

Thursday, August 16, 2007

Barry Bonds wouldn't think an Asterisk Makes him Special

I posted IBM's Ad for Pay By Touch a couple weeks ago (, make that undoubtedly, Saatchi & Saatchi can do better...) and I came across an interesting article regarding the IBM "What Makes You Special" campaign for Pay By Touch and I must admit, that I couldn't agree more with the author. Here's the article from Thomas L. Collins who writes for Direct Magazine.

The link is here

I did a makeover of an IBM ad some four years ago in this space. That one featured an out-of-focus photo of a reindeer and a headline in white letters, “Finnair Sees It” (The Makeover Maven, Oct. 15, 2003). I guess the same creative team is still around. And I guess they didn't read my column and decide to mend their ways. So I guess I'll have to tackle them again.

Not that it matters, of course. IBM still has $90 billion in annual revenue and 350,000 employees around the world. So why do they bother to advertise at all? I will forgo my usual sarcastic speculations and leave that to wiser heads.

But it will take a pretty wise head to figure out the thinking, if any, behind this ad for the Pay by Touch technology they've helped develop. Part of the puzzle is that I stumbled on the ad in Working Mother magazine.

OK, so working mothers who shop frequently at the supermarket should enjoy the convenience of simply laying a finger on a sensor pad at the checkout counter instead of having to fumble around for a credit card or a fistful of cash. But do working mothers really want to take time out from their busy day to fight their way through copy about “open architecture that seamlessly integrates the Pay by Touch system with retailers' existing IT infrastructures”?

And when I say “fight their way” through the copy, I'm not kidding. Nobody in my household, including me, could decipher that text in extra-tiny white type on yellow without a magnifying glass, and even then it was tough. I don't mean to seem condescending to working mothers. A certain percentage of the magazine's readers may indeed be working moms who are employed at sophisticated IT jobs.

But how significant a number? In the ad we see a bleed photo of a woman shopping in a supermarket's frozen food aisle. Near her hand that's opening a freezer door is a giant asterisk. The asterisked footnote is a tiny headline in white type: “This finger is legal tender.” Followed by that totally unreadable extra-tiny white text.

So nine-tenths or more of the bleed page is devoted to a striking photo of a shopper in a frozen food aisle. But the ad is not selling frozen foods or frozen food lockers. It's announcing the progress made in a revolutionary new way of paying for purchases. But the ad doesn't convey the excitement of important news.

When I was a copy chief I had some wonderful writers. But I was always on guard against a sloppy word or phrase which merely conveyed approximately what the writer intended.

In this case, “This finger is legal tender” is only approximately true. Sorry to be picky, but a homeless person with no assets would have a hard time trying to buy groceries with no legal tender other than his or her fingerprint.

My larger complaint about the ad, however, is that its purpose is not clear. You can't deliver a message if you don't know who it's intended for. So who is the ad primarily addressing? And what is the message it's trying to deliver?

I finally decided that it was designed to influence not one audience of readers but three, with three different messages. If you're a consumer, the aim is to make you and thousands of other readers want and demand Pay by Touch service at your favorite local retailers.

If you're a store owner or manager, it's to get you to start thinking about or giving more thought to installing Pay by Touch in your store. And if your office job demands wrestling with information technology challenges, it's good to be reminded that IBM is there to help you, just as they did with Pay by Touch. Even if poorly executed, the ad is a kind of IBM case history. And if it brings new business to IBM's client Pay by Touch, that's also good for IBM.

It could be argued that the original ad does deliver these three messages to these three audiences. But it does it so indirectly and unreadably that the intended reader would not be inclined to stop right there and say, “This means me.”

In my makeover, the headline and illustrations convey exciting news to both consumers and retailers, and at the same time fulfill the requirement of Point No. 7 from my Makeover Maven Measuring Stick: “Does the ad build brand recognition and trust?”

The illustrations I chose do what illustrations are supposed to do — illustrate. The pictures of a sensor pad and a fingerprint convey what the ad is talking about far better than a picture of a shopper laying her finger on a frozen-food locker's door handle.

Next I set about rescuing the original ad's text by displaying it in larger, infinitely more readable type — using boldface leadoffs to pull the eye through more easily — starting off with the classic problem/solution copy formulation and keeping in mind all three audiences along the way. So the reader who is only a consumer and who is bored by talk of “open architecture” can skim quickly through the ad and still come away wanting the convenience of Pay by Touch.

If you'd like to compare the original copy with my rewrite, here's what their unreadable fine print says:

Biometrics pays — literally. [Editor's note: To whom? for whom? No “you” in the copy.] Pay by Touch, a leading transactions technology company, [has? — Ed.] developed a point-of-sale service that allows customers to pay just by placing their fingers on a sensor. Easy, right? The challenge: to make it just as easy for retailers to integrate the device into the payment processing systems they've already got up and running. IBM and business partner Silicon Valley Systech Inc. collaborated to create an open architecture that seamlessly integrates the Pay by Touch system with retailers' existing IT infrastructures. Keeping millions of transactions moving smoothly. And as many customers happy. Want innovation for integration? Talk to the innovator's innovator. Call on IBM. To learn more, visit

What makes you special?

I certainly omitted that puzzling last line. To me it seemed almost sarcastic, as in, “What makes you so special, wise guy?”

And I didn't make any special effort to steer business prospects to IBM's Web site because I found it so disappointing. But that's not my department.

THOMAS L. COLLINS ( has been a direct marketing copywriter, admaker, agency creative director and co-author of four books on marketing. He is currently an independent creative and marketing consultant based in Portland, OR.

Find more Makeover Maven columns at:

PBT Ad Agency Honored at Cannes

Saatchi & Saatchi New York - Agency of the Year

Saatchi & Saatchi New York has been awarded 'Agency of the Year' at Cannes 2007. Saatchi & Saatchi New York was awarded the coveted “Agency of the Year” distinction at the 54th International Advertising Festival, the world's largest and most revered advertising competition.

This prize is given to the agency in one country that obtains the highest score for entries in the Radio, Press, Outdoor and Film Lions sections. Saatchi & Saatchi New York brought home a total of nine Lions, including the Grand Prix for its Tide Ultra print campaign.

Terry Savage, Executive Chairman of the Festival, noted: "The ‘Agency of the Year’ award is one of the most important and anticipated that we give in Cannes each year - to win it requires outstanding results across a range of categories.”

“The ‘Agency of the Year’ recognition at the Cannes Lions Festival is a tremendous honor. We've made it a priority to attract and cultivate a team of top creative talent from around the world and we’re thrilled with the results," said Saatchi & Saatchi New York's Chief Creative Officer Tony Granger.

The Grand Prix for Tide Ultra “Stains Don’t Stand A Chance” print campaign was recognized for taking the long-standing equity of a brand and finding a brilliant, contemporary new way to bring it to life. The jury also cited that attention to detail -- including the stitching around the Tide logo, which made the ad look as though it were a piece of clothing -- as one of the key factors in the win.

Mary Baglivo, Saatchi & Saatchi New York's Chief Executive Officer, added: “This win is a true testament to our recent transformation. Our string of new business success continues to grow in exciting ways. We’re experiencing a renaissance in creativity which spans across long-standing global clients like P&G, new retail clients and pro bono work. We are simply over the moon."

About Saatchi & Saatchi New York
Saatchi & Saatchi New York ( is the largest agency in the 153-office network which spans 83 countries. Part of Publicis Groupe, the world's fourth largest communications group, Saatchi & Saatchi handles #1 brands in its client portfolio, including: Tide, Pampers and Olay (Procter & Gamble); Pillsbury and Cheerios (General Mills); Wendy's; JCPenney; Excedrin, Theraflu and Triaminic (Novartis); BASF; Ameriprise; Avaya, Pay-By-Touch; and Reynolds Wrap. The agency represents clients with combined annual revenues of approximately $500 billion and market capitalization of approximately $650 billion.

Saatchi & Saatchi is known for its exceptional strength at creating the emotional connections between consumers and products. This approach comes to life through Lovemarks, the methodology created to create "loyalty beyond reason" and "inspirational consumers."

About Cannes Lions

The International Advertising Festival - Cannes Lions - is the largest gathering of worldwide advertising professionals and advertisers as well as the most prestigious annual advertising awards. Each year, over 10,000 visitors from the advertising and allied industries attend this event to celebrate the best of creativity across all media mix, discuss industry issues and network with one another. Over 25,000 ads from all over the world are showcased and judged at the Festival. Winning companies receive the highly coveted Lion trophy, honoring the most creative TV/cinema, print, outdoor, interactive, radio, sales promotion, integrated advertising, as well as the best media and direct marketing solutions. A unique program of high-profile seminars, workshops and keynote speakers, organized by some of the biggest names in the industry, are also presented.

Wednesday, August 15, 2007

PBT Partner Gains Momentum

EMERYVILLE, Calif.--(BUSINESS WIRE)--UPEK®, Inc., a leading worldwide brand of fingerprint authentication security solutions, today announced the availability of its Protector Suite QL software for direct purchase at for $14.99.
With more than 10 million copies shipped, UPEK believes Protector Suite QL continues to lead the market for personal biometric management as the preferred software application for business users and consumers using embedded fingerprint sensors in leading notebook computers. The software is available for immediate download after purchase and supports 32-bit versions of Windows Vista, Windows XP, Windows 2000, Windows 2003 as well as 64-bit versions of Windows XP and Windows Vista.

UPEKs partner program is designed to support a growing ecosystem of best-in-class partners including leaders such as Pay By Touch who bring additional utility and value to the fingerprint device by tying it into their existing products and services that also leverage the user benefits of the Protector Suite QL software.

For a complete list of supported notebook PCs, please visit:

Protector Suite QL has achieved an impressive track record of industry firsts, including the first fingerprint credential provider shipping for Windows Vista, the first 64-bit fingerprint software supporting both Windows XP and Windows Vista, the first integrated enrollment tutorial utilizing video, and the first software supporting an always on capability with the fingerprint sensor for a seamless user experience.

Protector Suite QL has established the benchmark for ease-of-use and brings password and personal data management to end users through the convenience of fingerprint biometrics. The software addresses the growing need for a simpler and more secure way to protect important personal information from threats such as phishing, password hacking attacks and malicious software.

To find out more about all of the benefits of Protector Suite QL and other UPEK products, please visit

To learn more about Pay By Touch's TrueMe platform, please visit

Tuesday, August 14, 2007

Citibank, Others, Plan Private Stock Platform

NEW YORK (Reuters) - Five of Wall Street's biggest banks, including Citigroup (C.N: Quote, Profile, Research), Lehman Brothers Holdings Inc. (LEH.N: Quote, Profile, Research) and Merrill Lynch & Co. Inc. (MER.N: Quote, Profile, Research), said on Tuesday they were setting up a system to trade privately placed stocks.

The group, which also includes underwriter Morgan Stanley (MS.N: Quote, Profile, Research) and Bank of New York Mellon (BK.N: Quote, Profile, Research), said the new platform would be designed to ease trading for privately sold securities. It will target companies looking to raise capital while avoiding the scrutiny and rules imposed on publicly listed shares.

The Open Platform for Unregistered Securities, or OPUS-5, would also offer an alternative to proprietary platforms introduced by Goldman Sachs Group (GS.N: Quote, Profile, Research), which led the underwriting of a private stock offering for Oaktree Capital Management, and JPMorgan Chase & Co. (JPM.N: Quote, Profile, Research), a lead underwriter for buyout shop Apollo Management.

The group of five expects to launch OPUS-5 system in September. The JPMorgan platform is dubbed "144A Plus."

Separately, Bear Stearns Cos. Inc. (BSC.N: Quote, Profile, Research) on Tuesday announced it has launched Best Markets, a private placement platform, in connection with its role as initial purchaser of a $140 million private placement by J.G. Wentworth, a buyer of illiquid insurance products.

All of these platforms are accessible only to "qualified institutional buyers" -- big money managers that currently participate in private stock and debt transactions.

The news comes a day before Nasdaq Stock Market Inc. (NDAQ.O: Quote, Profile, Research) launches its own platform for private securities called Portal, which has the potential to supersede the bank-run systems.


Last year, some $162 billion of unregistered equity shares were sold through U.S. private placements, outpacing the $154 billion raised in public offerings on U.S. exchanges, according to Nasdaq.

The trend has accelerated this year, with a number of closely held hedge and buyout firms choosing to issue shares to investors, but to do so outside the public realm.

Oaktree in May sold 15 percent of itself for $880 million on the Goldman Sachs Tradable Unregistered Equity system, or GSTrUE. Private equity firm Apollo Management sold a 12.5 percent stake, and its shares can now be exchange on the Goldman and JPMorgan platforms.

The five-bank group said OPUS-5 would facilitate trading of equities issued under the U.S. Securities and Exchange Commission's 144a rule, which govern private placements.

Nasdaq said it's received more than 1,700 applications to register placements with Portal this year, about 27 percent ahead of last year's pace.

Nasdaq, which registers private debt and equity placements, said on August 1 that the SEC had approved its plans for Portal. The system will go live Wednesday with roughly 600 issuers, while dealers and qualified investors register to trade on the system, Nasdaq says.

John Jacobs, a Nasdaq Executive Vice President, said that Portal complements the bank-run networks, which track shareholders to ensure private securities have fewer than 500 investors, a requirement under SEC rules.

Nasdaq's system handles companies that register shares with the Depository Trust and Clearing Corp., which currently does not track the number of shareholders. Jacobs said tracking should be in place in about six months, paving the way for closer links among the various platforms.

Jacobs said Nasdaq is in talks with the leading investment banks on the matter.

Thursday, August 2, 2007

Rapid Enrollment in PBT SmartShop Program

Press Release

Pay By Touch's New Rapid Enroll Product is an Immediate Hit with Four New Customers

Electronic sign up capability streamlines operational retail loyalty program operations

SAN FRANCISCO, Aug. 2 /PRNewswire/ -- Pay By Touch, the leader in integrated biometric authentication, personalized marketing and payment solutions, today announced that four separate retailers will pilot its internet-based Rapid Enroll kiosks to facilitate loyalty program customer sign up. All four will be live by the end of August.

Participating retailers launching pilot programs are located in New York, Wisconsin, Florida, and New England.

Additional store placements are expected to follow shortly.

Replacing the traditional paper-based enrollment process which is timely and error-prone, the sleek in-store kiosk facilitates simple and efficient electronic loyalty program sign-up. To join a retailers' loyalty program, a shopper needs only to enter a phone number and second identifier such as the first three letters of the last name. The back-end technology then automatically populates address information. The shopper can also enter her information manually.

The system also scrubs profile data against existing databases and automatically corrects any errors. The result is a more accurate loyalty program database that requires less time to process than paper based applications. What once took weeks can now be accomplished in minutes.

The installation of Rapid Enroll is flexible and simple for retailers. To get started, all a retailer needs is an internet connection and a power outlet -- no point of sale integration is required.

"One of the benefits of Rapid Enroll is that it can be customized to leverage custom loyalty program features such as charity donations, pet clubs, wine clubs, baby clubs, or rewards points," said Jeff Grider, VP Personalized Marketing, Pay By Touch. "These capabilities -- combined with lowered enrollment costs and the ability for our clients to know their new customers within a day -- makes this a compelling solution."

"To build and retain a loyal customer base in today's competitive retail environment, retailers must provide personalized service, and the most efficient way to do that is through loyalty programs," said John Rogers, Founder, CEO, and Chairman of Pay By Touch. "At half the cost of paper enrollments and infinitely faster, Rapid Enroll is the most efficient way to facilitate a positive return from loyalty program investment."

Rapid Enroll was developed by the Personalized Marketing division of Pay By Touch, which helps businesses manage loyalty and reward marketing programs with a full range of database management services in addition to its latest product introduction, SmartShop, which delivers customized coupons based on individual shopping history as shoppers enter a store.

Another Financial Institution Adopts PBT Check Cashing

West Texas National Bank Adopts Pay By Touch Biometric Check Cashing Service

Paycheck Secure™ powered by Pay By Touch speeds transactions and increases fraud protection for consumers in Midland Texas

MIDLAND, TX AND SAN FRANCISCO, CA – West Texas National Bank today announced that it has adopted Pay By Touch's biometric check cashing service. Paycheck Secure™ powered by Pay By Touch lets consumers use a finger scan to quickly and securely identify themselves to cash a government or payroll check.

West Texas National Bank introduced the innovative check cashing service through its branch location adjacent to the new Town and Country Convenience Store at I-20 and Rankin Highway.
Paycheck Secure powered by Pay By Touch is fast and easy to use.

To enroll, customers visit West Texas National Bank, where a bank employee will check their government-issued ID, scan their fingerprint and take a digital photograph. The one-time enrollment takes only minutes, and thereafter the customer need only place his/her finger on a scanner at the branch location to safely and securely cash checks.

"We are thrilled to be the first bank to bring this innovative service to Midland, and are pleased to provide check cashers with a secure environment in order to conveniently and quickly cash their checks," said Jerry Rogers, Chief Operating Officer of West Texas National Bank.

"Pay By Touch's secure and easy check-cashing solution helps West Texas National Bank attract new customers," said John Rogers, Founder and Executive Chairman of Pay By Touch.

"Paycheck Secure powered by Pay By Touch can help banks generate additional non-interest, fee-based revenue while decreasing the risk of fraud and meeting applicable regulatory compliance requirements."

For additional information about the Paycheck Secure service, visit

About West Texas National BankWest Texas National Bank ( is an intrastate bank headquartered in Midland, Texas. The company's mission is to provide outstanding banking services for loyal customers in West Texas while increasing the long-term value of its owners' investment. WTNB was chartered in 2000 and is a result of a merger between three independent banks. The bank is a wholly owned subsidiary of First West Texas Bancshares, Inc. (FWTBS), a one-bank holding company located in Midland, Texas.