Finger all some retailers need for payment
Fingerprint, code OK transaction
Washington Post | June 13, 2005
By Ellen McCarthy
'It's like when you watch TV and they put their hand on the screen to open the sliding door. This is kind of the same thing it's science fiction come to reality.'
Rich Gladu | a BP gas station owner whose customers have the option of using biometrics to pay for items
AT A GLANCE
Three or four days a week, Darren Hiers gets lunch at a Sterling, Va., convenience store near the car dealership where he works. He grabs a chicken sandwich and a soda and heads to the checkout counter, where a little gadget scans his index finger and instantly deducts the money from his checking account.
Hiers doesn't have to pull out his wallet to buy lunch - and if it were up to him, he'd never have to write a check or swipe a credit card again.
The finger scan used at the shop in Sterling, known as a biometric payment system and made by a Herndon, Va., firm, is just starting to be installed at convenience stores and supermarket chains across the country, another step in a revolution that is turning the human body into the ultimate identification card.
Already, faces and fingerprints are used to track visitors coming into the country. Computer passwords are being replaced by thumbprints at some companies and iris scans are giving consumers in England and Germany access to their bank accounts at ATMs.
The owner of BioPay LLC, which makes the technology used at the store, predicts the finger scan soon will be ubiquitous, offering speed and convenience for consumers. But civil libertarians have raised privacy concerns, citing some recent problems. In February, ChoicePoint Inc., a background-screening company that collects personal information - including biometric data - said it accidentally sold more than 100,000 individual profiles to identity thieves.
For many people, a fingerprint means one thing: a police record. That association could be enough to make many people wary. The car-rental business already has had some experience with this. Toward the end of 2001, Dollar Rent a Car began fingerprinting its customers to combat theft. The experiment lasted just four months, until consumer complaints forced the firm to reverse its policy.
Biometric payment systems work by connecting images of an individual's fingerprint to his bank account. At the Sterling convenience store, a BP gas station owned by Rich Gladu, users enroll by handing the cashier a personal check (verified with a driver's license) that is scanned into the computer. They then place each index finger on a tennis-ball-size reader that captures the unique characteristics of their fingerprints.
The enrollment process takes about two minutes and, from that point on, consumers can make purchases just by punching a 10-digit code (such as a phone number) into the countertop terminal and placing a finger on the reader. The funds are subtracted directly from the customer's checking account, as a debit transaction would be.
"It keeps me from having to carry cash or a checkbook," said Hiers, who sometimes stops by the Sterling convenience store twice a day to get lunch, fill up his gas tank and pick up rations for his hour-long commute home to Charles Town, W.Va. "It makes my life a little easier, especially if I just want to get in and get out."
That's exactly what BioPay President Tim Robinson likes to hear. His company makes the biometric technology used at the Sterling store and says it has a database of 1.8 million customers. Most of those consumers are using BioPay's technology as an identification verification for merchants cashing paychecks - an application intended to cut down on fraudulent checks. Customers have to enroll to cash paychecks, so if someone tries to cash a fake paycheck, the system will flag it. By this summer, 150 retailers will have installed the payment system.
Lowe's Food Stores Inc. will test BioPay's system at four of its 110 supermarkets. Next spring, it plans to install the technology at the rest of its stores, most of which are in North Carolina. More than 80 Piggly Wiggly Carolina Co. grocery stores in South Carolina and Georgia already have biometric payment systems made by Pay by Touch, a San Francisco company.
"Kids growing up now can't imagine that you needed a cord to use your telephone. Soon they're going to say, 'You mean you have to carry around a piece of plastic or a piece of paper to go buy something?'" Robinson said.
Biometric technology makers say the biggest advantage their systems can offer is speed at the checkout counter. Executives of Pay by Touch say a transaction on their system can be completed in about 14 seconds, compared with 64 seconds to process a check and 48 seconds for a credit card.
"We're all always convinced we've gotten in the long line. ... Any way we can improve that experience, make it quicker, make it more secure, we're interested in doing that," said Michael Sansolo, senior vice president of the Food Marketing Institute, an industry trade group.
Robinson, of BioPay, said the real motivation for retailers will be financial. Credit card companies often charge retailers a fee equal to almost 2 percent of the total purchase price for each credit transaction. So for every $30 tank of gas bought with a credit card at the Sterling BP, the store pays a fee of 60 cents or more. But BioPay charges the store a flat 15-cent fee for each transaction, regardless of the size of the purchase.
"What they're offering is a bit of relief from the transaction fees," said Gray Taylor, vice president of research at the National Association of Convenience Stores.
In 2004, the biometric payment market - which includes paycheck verification fees - totaled $33.8 million, according to the International Biometric Group.
That's just a sliver of the overall biometric market, which is dominated by se-
curity technologies and totaled $1.2 billion in 2004, but the payment market is expected to grow, according to the group.
Lee Tien, senior staff attorney at the Electronic Frontier Foundation, a San Francisco-based privacy-rights group, is concerned about that trend. He worries that the technology could be compromised, exposing huge databanks of personal information. Systems always can break, he says, either because of malicious or accidental causes, but the information stored by biometric companies is in some ways far more valuable than that held by credit card firms.
"You can always get a new Social Security number, but you certainly can't get a new thumbprint. ... If things mess up, I could be hurt much more badly by a mistake," Lee said. And week after week, headlines scream of data breaches putting thousands of individuals at greater risk of identity theft, a crime that can ruin personal credit and take months or years to clear up.
Robinson says a personal check written at a grocery store passes through eight people before it is cashed, a process he considers much less secure than a biometric payment, in which the fingerprint image is connected immediately to the user's bank account.
"What can I do to hurt you if I have a picture of the tip of your finger? Not much," Robinson said, saying associating fingerprints with legal troubles is unwarranted.
BioPay does not share its biometric data with government agencies, and in fact, the full fingerprints are not stored in the system. Instead, a complex mathematical algorithm is created to represent identifying characteristics of the fingerprint, which are matched to the real thing when a user shows up at a checkout counter.
The technology has taken off slowly at the Sterling convenience store. Since it was installed in late 2003, about 300 people have enrolled at that store and two others in Leesburg owned by Gladu. Except for a couple of small BioPay stickers on the doors of the shop and an occasional ad interrupting the easy-listening music pumped into the store, Gladu isn't really pushing the technology. He's convinced biometrics will take off eventually, but for now it's mostly a novelty, Gladu says, something to set him apart from the other gas stations in town.
"It's like when you watch TV and they put their hand on the screen to open the sliding door. This is kind of the same thing - it's science fiction come to reality," Gladu said.
How the BioPay system worksTo enroll, a customer gives the retailer a blank check and valid ID to scan into a computer.
The customer then places each index finger on a tennis-ball-size reader that captures fingerprints.
The customer selects a code to authorize debits from a checking account and to verify age.
Once enrolled, customers make purchases by placing a finger on the reader and entering a code.