Star Ledger

Under your thumb

January 30, 2003
By Greg Saitz

Here is an abbreviated recap of the history of payment methods: goats, gold, cash, checks, credit cards and now ... a finger.

Instead of swiping a card at the checkout counter, shoppers merely place their finger on a touchpad, punch in a pin number and walk out the door without fear of being branded a shoplifter.

The technology that ties a person's unique characteristics to their wallet has the potential to forever change the way consumers buy stuff. Don't have enough cash in your pocket? No problem. Lost your supermarket loyalty card? Don't worry. With fingerprints and other identification methods collectively known as biometrics, you can't leave home without it.

"I believe it's inevitable that people will use biometrics to initiate financial transactions," said Tim Robinson, president of BioPay, one of the nation's largest companies involved in using fingerprints at the checkout, or point of sale. "From the merchant's point of view, it's inexpensive and fast.

"From a consumer's point of view, it's convenient and secure."

But before you start thinking about ways to put Warren Buffett's fingerprints on top of yours, there are a few issues to consider. For one, some question just how accepting the shopping public will be of biometrics at the register.

Consumers are, after all, being asked to provide information that is not only private, it's also a part of them. Then there is the issue of establishing standards that everyone in the retail industry will adopt.

"The reasonable question will be cost and compatibility with point-of-sale systems," said Stephen Smith, a research director who focuses on retail for research firm Gartner G2. "The secondary issue will be consumer resistance to biometric technology."

The level of resistance probably will be linked to how intrusive the method of identification, he said. Privacy rights advocates also have questions.

"Certainly, it will be an attractive idea to consumers to be able to use something they carry with them all the time ... to pay for things," said Alan Davidson, associate director of the Center for Democracy and Technology. "The risk comes in how that information is being used and do we find ourselves on a slippery slope where everything is tied to the biometric identification."

Biometrics involves using a characteristic unique to an individual -- their fingerprint, their signature, their iris -- to identify them. It is used for security in such places as airports and government agencies.

A small but growing number of retailers -- mostly supermarkets and convenience stores -- have been testing checkout systems during the past year or two. The International Biometric Group, a consulting firm, estimated biometrics in retail and at bank ATMs was about a $9.5 million global industry last year. By 2005, the figure is estimated to jump to $125 million.

Much of that growth will come in places such as Korea, China, India and the Middle East, said Michael Thieme, the firm's director of special projects. In those areas, people are not as hesitant to use biometrics and there is not as much of a concern about integrating the new technology with existing systems.

At the National Retail Federation's annual convention in New York earlier this month, IBM unveiled a system for retailers that allows customers to use their signature as payment. The technology examines not how the signature looks, but the microcadence of the pen and a person's hand, said Tom Zimmerman, project leader for the IBM team that worked on the program.

"We look at the dynamics, the motion characteristics," Zimmerman said.

But using signature biometrics at stores might not be the best method, Thieme said.

"There is far too much margin for error between the initial and second signature," Thieme said.

Variables such as pen angle, or whether a person is sitting or standing, can affect signatures, he said. "At point of sale, signatures are just too difficult."

The more popular technique is to use fingerprints for confirming identity. Kroger, one of the country's largest supermarket chains, is testing biometric payment systems at several stores in Texas.

Most, if not all, of the major grocers in New Jersey do not use biometrics. Wakefern Food Corp., the purchasing cooperative for about 200 ShopRites, discussed using such a system but ultimately decided against it.

"Our biggest concern was consumer privacy and how would our customers feel about using it," spokeswoman Karen Meleta said.

Paul Kapioski, owner of the West Seattle Thriftway in Washington, said privacy was a concern for some customers when his 33,000-square-foot supermarket began using a fingerprint payment system from Solidus Networks in May. But once shoppers learned how the process works, they were accepting, he said.

"We've got about 3,000 people signed up on it and they seem to be using it pretty regularly," Kapioski said, noting the store's customer base is between 12,000 and 15,000.

Installing fingerprint checkout at individual stores or a few in a chain is one thing. But for the procedure to become more widespread, it would require consumers to register at each individual retailer -- or the creation of one or more central databases.

"I might mind going to a central agency and giving them my retinal scan or fingerprint because it feels a lot like George Orwell," Gartner G2 analyst Smith said, referring to the author's novel "1984."

The other option for shoppers could be equally unpalatable if they were forced to register separately at every store they shop.

"You can either have one copy of your data or 30," said Thieme from the biometric group.

Herndon, Va.-based BioPay hopes to be one of the main repositories if that happens. The company already maintains the world's largest nongovernmental fingerprint database at 350,000 people, Robinson said.

BioPay has built its business by allowing stores to enroll customers, many of whom do not have checking accounts. The identity of shoppers who bring in payroll checks or other checks can then be verified.

The company plans to begin test launches of a new system in February that connects a person's checking account to their fingerprint, Robinson said.

A large electronics chain has signed on for the tests, but Robinson declined to provide the store's name.