March 24, 2008
Biometric Payments No Longer Offered at Supervalu
The bankruptcy of Solidus Networks, owner of the Pay By Touch biometric payment system, means that banners owned by Supervalu will no longer be offering the service to consumers.
Albertsons, bigg’s, Cub Foods, Farm Fresh, Hornbacher’s and Jewel-Osco were the chains that offered the Pay By Touch system in a select number of stores.
Solidus blamed insufficient funds and the current state of the market on its decision to discontinue the service.
The end of the biometric payment system is a steep fall from 2006 when Jewel-Osco announced the Solidus program would be installed in the chain’s 204 stores.
Supervalu expressed regret that the service would no longer be available. Company spokesperson Haley Meyer told the Minneapolis/St. Paul Business Journal, “Supervalu strives to offer services that make our busy customers’ lives easier, and we will continue to look for ways in which we can do that.”
Discussion Questions: Does the failure of Solidus Networks mean the end of biometric payment systems at retail? Why haven’t biometric payment systems become more widely used in retail settings?
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Biometric rules! …But Solidus doesn’t.
The problem here is execution, not concept. Authentec has it right: lock-down cellphones with fingerprints making a wave-and-pay resident on your cellphone wallet. Why is this the holy grail? Because real-time messaging, location-based promotion and payment can be synchronized on a consumer-controlled device. Further, centralization of ID is not only more convenient, it is safer too.
Watch out now–these are growing pains only. Biometric ID isn’t dead; it’s morphing into the right format for mass use.
Contactless payment methods using cell phones and near-field communication (NFC) technology may indeed gain wider acceptance than biometric technology.
Certainly, it seems unlikely to me that shoppers will find it convenient or congenial to register a fingerprint with each retailer they do business with. You can cancel an ATM or credit card or a cell phone number if one becomes compromised, but you cannot cancel your index finger.
There are tiny biometric scanners available to turn on and activate cell phones, door locks (even handgun triggers, if I’m not mistaken). Here is where the technology is likely to shine. But as a system aimed at retail chains, I don’t really see the business model–doesn’t seem likely to augment profits or enhance the shopper experience enough.
Once again the failure of Solidus proves we need to have better filters for evaluating retail technology. We fall in love with the hype and then have no way vetting process in place to evaluate it.
Without knowing what caused the bankruptcy at Solidus, it’s a little difficult to draw a conclusion on the whole biometric movement. In every technology area some companies have succeeded and some have gone bankrupt. That does not necessarily mean the demise of all forms of biometric payment. This type of payment will be another huge change for consumers. The innovators will always be interested in trying new things. The majority will need to know what benefit they get for using fingerprints or their irises for identification purpose. When the benefit is desirable enough, people will begin to use it–assuming that the process is profitable.
This setback for Supervalu and Solidus will also be a big setback for other biometrics companies’ attempts to push this concept going forward. Consumer recognition of, and concerns about the ultimate fate of all the confidential information and fingerprint images Solidus holds, and their ability to protect this “asset” in bankruptcy and beyond will rock the industry.
When I read the Tribune article I certainly thanked my lucky stars I had not signed up for this program at my local Jewel.
I can see biometric payment systems having real consumer benefit in certain payment situations, but the supermarket is probably not one of them. Not a big increase in convenience for the consumer. Once biometrics are established as something you need as a consumer, then the more places you can use it the better, and we may see the supermarket among them.
The reason payment biometrics (as opposed to authenticating employee access to POS or timecards) hasn’t worked in retail is simply that it never delivered the promised value.
The original pitch for biometrics was faster payment. But contactless payment pretty much usurped that claim. (How well contactless payment will ultimately do is another very interesting question.)
There are other hurdles it couldn’t clear–such as consumer resistance to the idea of scanning a finger, with all of the privacy fears–but the fact that retailers didn’t see it delivering much value trumped everything else. (Also, fingerprint scans do not apply to everyone. An ever-growing number of people–including those work with their hands a lot, use chemicals [such as cleaning solutions], people who take certain prescription drugs, etc.–have problems getting their fingerprints to scan accurately. It doesn’t take a lot of false negatives in the checkout aisle for this to be a major issue.
This may simply be an idea that is ahead of its time. However, I do wonder about the cost/benefits of this approach to the checkout process. It is relatively costly in terms of database and technology requirements. Furthermore, it requires shoppers to provide very personal data in the form of fingerprints.
By comparison, the convenience benefits seem almost trivial. I don’t know how many shoppers signed up to do this, but clearly it was not enough to support the system.
One of the big issues in biometric payment is the evolutionary time frame of substantial change in the form of payment system. Biometrics is going to take more than 2-3 years to be accepted universally as a payment system. Credit cards took ten years and checks even longer. This evolution needs time as well.
The other issue is that the value system was built around the retailer, not the consumer. Biometric payment processing actually costs the retailer less. It was not so much the processing time but the lower interchange fees that helped retailers protect slim margins.
Solidus Networks would have been better off narrowing their focus to one or two channels and riding out the evolution cycle to make the business case solid in one channel, and then expand from there.
I believe the future of payment and personalized shopping solutions will involve biometrics in the future, which allows the shopper to choose where and when they want to be identified. This is way more consumer-acceptable than RFID.
When customer-facing biometrics first came on the scene I thought it was a non-starter (intrusion of privacy and other reasons). As it grew in adoption, I decided my first instincts were wrong.
I guess I was right, and I stand by it now. It’s an unlikely payment tool. The same number (or less) of people will be interested in biometric payments as are interested in biometric security check-in at airports (i.e. not too many!).
Biometrics solve the “walletful of plastic cards” issue. They also help reduce security issues. Just because Solidus went Chapter 11 doesn’t mean it will disappear. Many Chapter 11 companies reorganize successfully and emerge from bankruptcy. And if Pay By Touch gets dissolved, this doesn’t mean biometrics will die along with the company. There are many other biometric players, although none tried to focus on retailers like Solidus.
Retailers are often very slow to adopt new technology, so it’s likely that Pay By Touch didn’t plan adequately in that regard. All too often, companies with great technology but mediocre marketing fail to become dominant. Usually the companies with the best marketing (even if their technology is second-rate) are the winners. Solidus #1 error: they didn’t align themselves with the complementary players, like credit card providers, POS equipment and software manufacturers, or loyalty card suppliers. Trying to “go it alone” is too hard. Look at the contactless payment folks: they get their technology adopted because the equipment is subsidized by the payments industry. The retailer thinks he’s getting something for “free.” Great technology with poor marketing is like a great sports car with flat tires.
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Biometric rules! …But Solidus doesn’t.
The problem here is execution, not concept. Authentec has it right: lock-down cellphones with fingerprints making a wave-and-pay resident on your cellphone wallet. Why is this the holy grail? Because real-time messaging, location-based promotion and payment can be synchronized on a consumer-controlled device. Further, centralization of ID is not only more convenient, it is safer too.
Watch out now–these are growing pains only. Biometric ID isn’t dead; it’s morphing into the right format for mass use.
Contactless payment methods using cell phones and near-field communication (NFC) technology may indeed gain wider acceptance than biometric technology.
Certainly, it seems unlikely to me that shoppers will find it convenient or congenial to register a fingerprint with each retailer they do business with. You can cancel an ATM or credit card or a cell phone number if one becomes compromised, but you cannot cancel your index finger.
There are tiny biometric scanners available to turn on and activate cell phones, door locks (even handgun triggers, if I’m not mistaken). Here is where the technology is likely to shine. But as a system aimed at retail chains, I don’t really see the business model–doesn’t seem likely to augment profits or enhance the shopper experience enough.
Once again the failure of Solidus proves we need to have better filters for evaluating retail technology. We fall in love with the hype and then have no way vetting process in place to evaluate it.
Without knowing what caused the bankruptcy at Solidus, it’s a little difficult to draw a conclusion on the whole biometric movement. In every technology area some companies have succeeded and some have gone bankrupt. That does not necessarily mean the demise of all forms of biometric payment. This type of payment will be another huge change for consumers. The innovators will always be interested in trying new things. The majority will need to know what benefit they get for using fingerprints or their irises for identification purpose. When the benefit is desirable enough, people will begin to use it–assuming that the process is profitable.
This setback for Supervalu and Solidus will also be a big setback for other biometrics companies’ attempts to push this concept going forward. Consumer recognition of, and concerns about the ultimate fate of all the confidential information and fingerprint images Solidus holds, and their ability to protect this “asset” in bankruptcy and beyond will rock the industry.
When I read the Tribune article I certainly thanked my lucky stars I had not signed up for this program at my local Jewel.
I can see biometric payment systems having real consumer benefit in certain payment situations, but the supermarket is probably not one of them. Not a big increase in convenience for the consumer. Once biometrics are established as something you need as a consumer, then the more places you can use it the better, and we may see the supermarket among them.
The reason payment biometrics (as opposed to authenticating employee access to POS or timecards) hasn’t worked in retail is simply that it never delivered the promised value.
The original pitch for biometrics was faster payment. But contactless payment pretty much usurped that claim. (How well contactless payment will ultimately do is another very interesting question.)
There are other hurdles it couldn’t clear–such as consumer resistance to the idea of scanning a finger, with all of the privacy fears–but the fact that retailers didn’t see it delivering much value trumped everything else. (Also, fingerprint scans do not apply to everyone. An ever-growing number of people–including those work with their hands a lot, use chemicals [such as cleaning solutions], people who take certain prescription drugs, etc.–have problems getting their fingerprints to scan accurately. It doesn’t take a lot of false negatives in the checkout aisle for this to be a major issue.
This may simply be an idea that is ahead of its time. However, I do wonder about the cost/benefits of this approach to the checkout process. It is relatively costly in terms of database and technology requirements. Furthermore, it requires shoppers to provide very personal data in the form of fingerprints.
By comparison, the convenience benefits seem almost trivial. I don’t know how many shoppers signed up to do this, but clearly it was not enough to support the system.
One of the big issues in biometric payment is the evolutionary time frame of substantial change in the form of payment system. Biometrics is going to take more than 2-3 years to be accepted universally as a payment system. Credit cards took ten years and checks even longer. This evolution needs time as well.
The other issue is that the value system was built around the retailer, not the consumer. Biometric payment processing actually costs the retailer less. It was not so much the processing time but the lower interchange fees that helped retailers protect slim margins.
Solidus Networks would have been better off narrowing their focus to one or two channels and riding out the evolution cycle to make the business case solid in one channel, and then expand from there.
I believe the future of payment and personalized shopping solutions will involve biometrics in the future, which allows the shopper to choose where and when they want to be identified. This is way more consumer-acceptable than RFID.
When customer-facing biometrics first came on the scene I thought it was a non-starter (intrusion of privacy and other reasons). As it grew in adoption, I decided my first instincts were wrong.
I guess I was right, and I stand by it now. It’s an unlikely payment tool. The same number (or less) of people will be interested in biometric payments as are interested in biometric security check-in at airports (i.e. not too many!).
Biometrics solve the “walletful of plastic cards” issue. They also help reduce security issues. Just because Solidus went Chapter 11 doesn’t mean it will disappear. Many Chapter 11 companies reorganize successfully and emerge from bankruptcy. And if Pay By Touch gets dissolved, this doesn’t mean biometrics will die along with the company. There are many other biometric players, although none tried to focus on retailers like Solidus.
Retailers are often very slow to adopt new technology, so it’s likely that Pay By Touch didn’t plan adequately in that regard. All too often, companies with great technology but mediocre marketing fail to become dominant. Usually the companies with the best marketing (even if their technology is second-rate) are the winners. Solidus #1 error: they didn’t align themselves with the complementary players, like credit card providers, POS equipment and software manufacturers, or loyalty card suppliers. Trying to “go it alone” is too hard. Look at the contactless payment folks: they get their technology adopted because the equipment is subsidized by the payments industry. The retailer thinks he’s getting something for “free.” Great technology with poor marketing is like a great sports car with flat tires.