Piggly Wiggly Switches on First Stores for In-Lane Biometric Payments

Piggly Wiggly Carolina Co., a Charleston, S.C.-based supermarket chain, today switched on an in-lane biometric payment system in four stores on the way to a planned rollout of the fingerprint authentication system to all 116 stores in the chain. The system, from San Francisco-based Pay By Touch, allows customers to pay for goods at the cash register by touching a fingerprint scanner. The scanners send mathematical templates of customers' fingerprints along with a search code to a massive database for a match with templates stored when customers enroll in the program. The templates are linked to credit, debit, and checking accounts for payment. The system promises faster checkout than card, cash, and check payments and allows merchants to influence customers' choice of payment channel, an important feature for chains looking to move electronic payments away from higher-cost credit and signature-debit channels and toward lower-cost networks for debit through electronic funds transfer networks and the automated clearing house. Piggly Wiggly also sees a competitive advantage. “The goal is to stay on the edge of technology and have something our competition doesn't have in this market,” says Rita Postell, manager of community and employee relations at Piggly Wiggly, which in March signed an agreement with Pay By Touch that made the grocery chain the first retailer in the country to commit to a commercial rollout of the system (Digital Transactions News, March 10). Postell says she expects an “overflow of customers” using the system, which is installed in all lanes in two stores in Charleston and two in Columbia, S.C. To assist with enrollment and customer education, Pay By Touch and Piggly Wiggly have installed mobile kiosks in all four stores, and the grocer is running radio ads, hanging in-store signage, and passing out brochures. The company is also running a promotion in which customers who enroll are entered in a drawing, the main prize of which is free maid service for one year. Postell says this should appeal particularly to the housewives who shop at Piggly Wiggly. Tests the company ran prior to today's kick-off indicate tender times can be cut by about one-third, Postell says, from the average speed for cash transactions. She adds some customers may reluctant at first to use the system, but “once they understand the concept it's a no-brainer.” Payment systems linked to biometrics have met some resistance in the past among consumers who view fingerprint collection as an invasion of privacy. Pay By Touch's system, however, doesn't store fingerprints, but rather stores mathematically derived templates linked to payment accounts customers designate at enrollment. In this way, customers can pay without using a card, checkbook, or cash. “As the news gets around, the whole customer base will feel more comfortable with it,” says Postell. “It will take off.” As the kiosks move on to other stores, customers will enroll at the customer-service counter or in-lane. Both Piggly Wiggly and Pay By Touch say the rollout is moving on schedule. More stores will come live beginning in September, Pay By Touch officials say. Others will follow over a 24-month period “if everything goes well,” Postell says. Up to now Pay By Touch has been in operation at a supermarket in Seattle and in a handful of video-rental stores. It has been subsidizing the cost of scanners and signed a deal with IBM Corp. in January to help with implementations. It charges merchants a per-transaction fee of 5 to 10 cents, depending on volume. Terms of the agreement with Piggly Wiggly have not been disclosed. One drawback to biometric payments tied to Visa and MasterCard accounts is that the card networks treat them as card-not-present, which triggers a higher interchange cost. Pay By Touch has said it is working with the card associations to get them to adjust their interchange rates for biometric payments. “We recognize this is something we want to address and change in the future,” says Caroline McNally, chief marketing officer at Pay By Touch and a former executive at both bank card associations. “But it's like turning a big boat around in a small harbor.” Now the company is counting on the Piggly Wiggly rollout to help it sell the system to more retailers. Pay By Touch executives say they'll closely monitor tender times, payment shift to lower-cost transactions, and what they call the “brand halo” effect of advanced technology. Their hope is that Piggly Wiggly will get a measurable lift in sales and profits from an influx of customers drawn by the technology. “It's the brand halo effect of being associated with something that's innovative,” says McNally. “Our premise is this will lead to bottom-line profitability.” The company has surveyed customers and plans to re-interview them in 60 days, “after the hype has worn off,” says McNally, to see if there has been a shift in attitude toward the Piggly Wiggly brand. Postell seems to have few doubts. “It's time for this [technology],” she says.