Consumers Resist Retail Biometrics - Page 3


The retail IT community is still enthusiastic about the long-term potential of biometric authentication for checkout, and the initial implementation hiccups are seen as the natural flow of any new technology.

Vendors have a similar attitude towards RFID technology, seeing huge potential supply chain savings as outweighing deployment issues.

A key reason that retailers want biometric authentication to ultimately work involves the cost of payment systems in their various forms, including labor costs and processing fees; the need to keep checkout lines moving; and the potential sophistication of CRM data and how easily it can be leveraged into more sales and reduced costs.

At Piggly Wiggly, for example, checks are considered to be the most costly means of payment. Thats not merely because of the additional time consumers need to use them, but because of bounced checks (accidental as well as deliberate) and the costly systems in place to minimize them.

The second most expensive means of payment is cash.

The payment must be counted at checkout, the total amount of cash must be painstakingly counted and recounted at the end of the shift, and the potential for theft is higher because it is considerably easier to steal, resulting in even more expensive security procedures and devices for monitoring and controlling cash activities.

The anonymity of cash is also a concern for retailers because it undermines CRM efforts, making it the most unstrategic means of getting paid.

That partially explains why Piggly Wiggly is so interested in biometric checkout options. In October, for example, 13.87 percent of all customer transactions were done by check, accounting for 7.5 percent of all sales dollars that month, Bolt said, while 64 percent of all transactions involved a cash payment, representing 46 percent of all revenue the store took in that month.

One of the other attractions of biometric checkout systems is the ability to link authentication with a wide range of payment options, including several that offer much lower transaction fees than MasterCard, Visa and AmericanExpress.

Relatively high bank card fees are angering many retailers, prompting a significant protest demonstration at this months National Retail Federation tradeshow in New York. To the extent that biometric authentication could be a tool to loosen the reliance that retailers have on those higher-priced cards, its of keen interest to retail executives.

Pay By Touch, for example, is pushing its eCheck program, in which consumer funds are debited directly from checking accounts, as with a debit card, except that a finger scan replaces the debit cards traditional PIN or—more rarely—required signature.

When a consumer enrolls in a biometric authentication program, he or she is presented with a list of payment choices. Given that consumers will often select the first option, Riordan suggested that retailers make it a payment method with lower cost to the retailer, such as eCheck. That would also generate revenue for Pay By Touch at the expense of the major credit card companies.

With such financial incentives, retailers very much want these systems to work. But getting widespread consumer support is not going to be easy, given perceptions about security and privacy. And privacy activists like Albrecht want to do what they can to make that hurdle even higher.

"Fingerprint systems serve as a de facto loyalty card. The same Pay By Touch system that sends your ID data to the retailer to process your transaction sends your personal information to the marketers, too," Albrecht said.

"This issue is particularly vexing to me, given that Ive spent the last six years trying to remind people that they should make their purchases anonymously if they dont want to reveal intimate details about their lives to marketers and the government. There is nothing more perversely opposed to that ideal than paying with a fingerprint, the very embodiment of personal identity in most peoples minds."

Next Page: Security experts explain consumer resistance to biometrics.