Friday, February 10, 2006
Pay by Touch Brings Biometrics Home
Pay By Touch Enters the Race to Offer Payments to Web Merchants
(February 6, 2006) Pay By Touch Solutions, which has spent the past several years building out a point-of-sale network for its biometric-payment service, is now joining the rush to bring electronic payment alternatives to the Internet. Its new Pay By Touch Online product, which it is announcing today, is set to go live this spring with Web merchants and will allow the more than 2 million consumers who have enrolled in the brick-and-mortar service so far to buy goods online by using fingerprint sensors attached to their home computers.
In introducing the service, San Francisco-based Pay By Touch is stressing security for consumers and low acceptance costs for merchants to distinguish itself from a raft of online payment alternatives now available or under development. “We’re trying to help consumers transact more securely and conveniently on the Internet,” says Jon Siegal, the executive vice president at Pay By Touch who is heading up the effort.
Pay By Touch, which has relationships with more than 10,000 online retailers through its acquisitions of CardSystems Solutions Inc. and Intercept Payment Solutions, both merchant processors, will not say which ones it is talking to, though Siegal says he expects to implement deployments “throughout 2006.”
The merchants linked to CardSystems, whose platform and other assets Pay By Touch acquired last fall, “will be the first ones we talk to,” says Siegal. Pay By Touch Online will rely on the same electronic fingerprint-identification technology used in some supermarkets and other stores that have adopted the service. Siegal says Pay By Touch is in talks with companies that make the sensors to certify their devices, which he says will sell to consumers for less than $30 apiece and will be distributed by financial institutions as well as by Pay By Touch.
The new service will serve three main purposes. The “Express Sign-in” feature allows consumers to log into any Web-based service provider without entering passwords, user names, or other information. As long as the site has enrolled with the service, Pay By Touch will authenticate users from the data it picks up when they touch their sensors.
A second component, “Multifactor Authentication,” will allow online banking services to identify users via password, computer ID, and fingerprint, addressing a guideline published late last year by the Federal Financial Institutions Examining Council that pronounced traditional single-factor (password/user-name alone) authentication inadequate and strongly encouraging multifactor methods (Digital Transactions News, Oct. 26, 2005).
The third feature, “Express Checkout,” will allow enrolled merchants to sell products online to enrolled consumers, with all transactions processed by Pay By Touch from the electronic wallet consumers set up when they enroll. The wallets can contain credit and debit card accounts as well as checking-account access via the automated clearing house, though many POS merchants either disallow card usage or encourage the lower-cost ACH channel. Pay By Touch will offer funds guarantee to merchants on ACH e-check processing, though its transaction pricing will be higher for this option.
One of the reasons Pay By Touch is screening sensor makers, Siegal says, is that the online service will establish a direct link from the consumer’s computer to the company’s servers, allowing encrypted fingerprint data to bypass the computer’s operating system and, Pay By Touch hopes, frustrating trojans or other malware that might be on the machine. The service will include a loyalty program as well in which merchants and manufacturers will be able to “pre-populate” the wallets with offers such as discounts that can be spent online or in stores.
Siegal will not give transaction projections for Pay By Touch Online or say how it will be priced, though he says merchants should expect to cut transaction costs in half when compared to what they pay currently to accept credit and signature debit cards. In the POS installations, merchants pay a fee to Pay By Touch as well as their routine discount or ACH fees for electronic transactions
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Pay By Touch
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