Pay By Touch Close to Breakthrough Deals, CEO Says

Pay By Touch, the San Francisco-based supplier of a point-of-sale payment technology that replaces cards and other media with fingerprint scans, says it is close to several major deals which, if consummated, will give the fledgling company and its system considerable momentum. Among the deals in the pipeline, says Pay By Touch chief executive Craig Ramsey, are installation agreements with a grocery chain in the $30 billion range in revenue and a hardlines retailer in the $20 billion range. Ramsey will not give names but says the agreements should be signed within the next few weeks. The company expects to have 14 chains in various stages of deployment by the end of the year. Also imminent, he says, are separate agreements with a major bank and a credit card company, both unnamed, to create stored-value accounts that consumers would access via fingerprint scans. The stored-value agreement with the bank, Ramsey says, will allow consumers to designate a prepaid account when they enroll and fund it with a third-party check, such as a paycheck, then access that account each time they pay. The bank would also issue a card cobranded with Pay By Touch that would allow consumers to withdraw cash from the account at ATMs. The account could be accessible only at the check-cashing merchant or at all merchants supporting Pay By Touch. The arrangement with the credit card company would create what Ramsey calls a “universal” stored-value account, branded by the card company and linked to consumers' fingerprints, in addition to a “cardless card,” or a credit card account cobranded by the company and Pay By Touch. Ramsey says he expects sign-off on both deals within “the next few weeks.” He figures that of the 200 million Pay By Touch accounts he expects within four years, some 5% could be linked to the products created with the bank and credit card company. Currently, the Pay By Touch technology is in operation at a Thriftway supermarket in Seattle and in five locations of a video-rental chain. Consumers enroll in the system at the store by registering a digitized, encrypted record of their fingerprint along with a seven-digit code. These records are linked to one or more card or checking accounts selected by the consumer. Once enrolled, consumers pay by scanning their finger and selecting the account they want to use. Pay By Touch then processes the transaction as if the consumer had swiped a card or written a check. Pay By Touch has marketing agreements in place with both Accenture and IBM Corp. to sell the technology to merchants and to install the $40 scanners necessary to implement it. Pay By Touch charges a transaction fee between 5 cents and 10 cents. It says its experience so far has shown reduced tender time and high rates of consumer enrollment. At the same time, since merchants control the order in which consumers' accounts appear at the point of sale, the supermarket has been able to shift share of payment from higher-cost credit and signature-based debit card transactions to lower-cost debit transactions based on personal identification numbers.