Consumer Resistance Could Kill

 
 
By Evan Schuman  |  Posted 2006-01-30 Email Print this article Print
 
 
 
 
 
 
 


the Deal"> Avivah Litan, a research director at industry analyst group Gartner, said the future of biometrics is a question mark and Pay By Touch knows it. "Pay By Touch is having some success in various grocery chains around the country, but they have had to diversify their offerings, for example by buying Cardsystems International, a payment processor, because their future revenue streams from biometric payments are still uncertain," Litan said.
However, consumers will likely warm to biometrics and its use will increase, she said.
"Consumer surveys indicate that biometrics is a favored consumer method for authentication, and as long as merchants like Piggly Wiggly can use it to lower their own payment costs, I think we will see fingerprint-initiated payments continue to gain adoption," she said. "The ROI for merchants is too compelling to ignore, as it gives them a lower-cost alternative to credit and debit cards." Consumer resistance, though, could be a deal-killer for biometrics unless the industry turns things around quickly. "You can look for alternative payment systems, but you dont have a lot of choices. Theres smart cards and biometrics. None of it is really viable in the market," Gartners Litan said.
"Theres not a lot you can do if consumers dont like biometric payments, unless there are some pretty big incentives. But then its not worth it. The whole reason Piggly Wiggly tried this was to reduce the cost of payments," she said. Piggly Wigglys Bolt defended the ROI of incentives, arguing that the incentives are short-term costs to get consumers to try the technology. If they try it and dont want to keep using it, the experiment failed and it stops. If they like it and keep using it, the experiment succeeded and the incentives stop being offered. Rasch pointed to data thefts—such as the recent announcement that Ameriprise Financial lost the financial data of some 158,000 clients and 68,000 advisers when a company laptop was stolen from an employees car—as giving another reason that biometric authentication should be evaluated very carefully. "The privacy concerns are both perceived and real. The perceived concern is that theres a database of my fingerprint. And if someone steals that database, they can commit crimes and have me blamed for it. Thats a perceived concern, not a real one," Rasch said. "But there are real concerns with fraud and theft. Companies are always losing personal information. Imagine losing a database of biometrics. Those are much worse problems. I can get a new credit card. It would take a while to get a new finger." Retail Center Editor Evan Schuman can be reached at Evan_Schuman@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.


 
 
 
 
Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.
 
 
 
 
 
 
 

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