Pay By Touch system set to expand in 2006

Pay By Touch, the leading US operator of retail payment systems based on biometric data, says it will see a dramatic expansion in the number of stores offering its finger scanner-based system at their cash registers in 2006.

Almost 300 stores are in Pay By Touch’s network, which allows participating customers to use their finger to access an “electronic wallet” of direct debit and credit payment options. But John Morris, chief operating officer, said he expected at least 6,000 stores to be using the company’s payments system by the end of next year.

“In the first week of January we begin a pace of 60-100 a week, and we’ll be rolling very rapidly. By the end of [2006] we’ll have safely 6,000 and maybe a thousand more than that.” Over the past year, Pay By Touch has signed contracts to provide its payments system to units of Supervalu in Chicago and Minnesota, as well as to the Piggly Wiggly regional supermarket chain in North and South Carolina.

It is also involved in a pilot programme with Albertson’s supermarkets in Portland and Chicago, and has a contract for a pilot scheme with an oil company operating 10 petrol station convenience stores in the Chicago area.

John Rogers, founder and chief executive, said 2005 had marked “an inflection point” for the company.

“The core technology is rock solid and proven and we’re deploying it to the US and abroad. We’ve spent tens of millions of dollars on our technology platform to support the biggest retailers in the world, and now we’re expanding it.”

This month, Pay By Touch announced the acquisition for $82m of BioPay, its principal US rival, which operates a finger-authenticated cheque cashing system at 1,600 stores.

It also expanded its payment processing system with the acquisition of CardSystems Solutions, a credit card processor, and acquired Capture Resource, which manages loyalty programmes for more than 12,000 supermarkets and stores. In November the company raised $130m from investors, including Ron Burkle, the veteran supermarket investor. It is eventually expected to seek an initial public offering. “We believe it’s in the reasonably near future,” said Mr Rogers.

Pay By Touch’s system is being tested in the UK by the Midcounties Co-op. Mr Rogers said the company had also held discussions with leading retailers in France and Germany.

He added that it was also expecting to focus next year on developing its loyalty offerings. These include a system that uses the information generated by a finger-based loyalty shopping account to tailor promotional offers.

The expansion of biometric payments comes as leading credit card issuers in the US are rolling out their new generation of credit cards, based on radio frequency chip technology.