Thursday, March 30, 2006

Bread Box' 19 Stores Implement PBT

KnoxNews: Business (subscription)

Bread Box stores step into future to offer biometric pay system

By CYNTHIA YELDELL, March 30, 2006

It's been perceived as clever, cool, a fad, an invasion of privacy or something out of a science fiction novel, but many retailers agree that biometric payments are the wave of the future.

Bread Box, a Knoxville area convenience store chain, says it's the first company in Tennessee to give customers the option to pay for items with only the touch of a finger.

The company's new BioPay system eliminates the need for checks, cash and other traditional payment methods by taking a finger scan that identifies customers by reading points of their fingerprints. Payments are automatically deducted from the shopper's checking account.

While privacy advocates are concerned about government tracking, Bread Box President Chuck Baine said the system is safe and convenient. Baine said the system virtually eliminates identity theft while also reducing his payment processing costs, allowing him to pass those savings along to customers.

"You can image a period where you wouldn't need a wallet," Baine said. "It's really simple, and it makes sense." BioPay is a biometric services provider that's owned by Pay By Touch, a San Francisco-based company that provides biometric authentication, loyalty, membership and payment services. Pay By Touch paid a reported $82 million in cash and stock for Virginia-based BioPay in December.

BioPay says it offers customers a speedy check out and enhances security since "your finger is unique to you." Baines sees it as a "way to differentiate ourselves and do new things that are fun to customers." Customers have their finger scanned inside the stores. BioPay doesn't have systems that allow finger scans at the pump, Baine said, but he expects that technology to be available later this year and he will add it to his locations.

Baine expects competitors to add similar biometric systems once they become available at the pump, but he is trying to stay a step ahead. He said the system could potentially save him thousands of dollars in credit card processing costs.

Since gas prices have risen, Baine said, more customers have switched to credit-card payments, which can cost him 7 or 8 cents per gallon. Baine paid $700,000 in credit-card processing fees last year. Bread Box has 19 locations in the Knoxville area that generate $70 million in sales annually.

"In the beginning it's not going to save a lot of money," Baine said. "I hope to develop a culture to get people using BioPay and switch credit-card customers over." As an incentive, Baine is taking a nickel off the price of each gallon of gasoline purchased in April for customers who sign up.

Predictably, customers have mixed feelings about the system.

Charles Fulford said he would have to weigh the pros and cons. "It's clever and interesting," Fulford said, adding that he would want to know who has access to the information. "I would have to know it's going to be taken seriously and not a passing fad or gimmick." Alison Kirk, a 21-year-old Bread Box customer, would be willing to experiment. "It's kind of cool, but it makes me a little nervous," she said.

BioPay maintains that the system is secure because the consumer leaves behind no personal information. The company also says it prevents identity theft because only the person matching the finger scan can use the account.

Biometric technology has been around for years, said Hussain Shah, a marketing assistant for the company. It has been widely used in the security industry. Retailers first used the technology for identification of customers who needed to cash checks. Several area Bi-Lo grocery stores had used BioPay for check cashing but those locations were sold to Food City, which does not use it.
Shah said BioPay was first used as a payment option in 2003 and more than 2,000 retailers, grocery stores and restaurants now use it.

The company has more than 2 million customers. Fortune Magazine reported recently that Wal-Mart and Costco are believed to be looking into biometric payment systems.

Pay By Touch

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