PIGGLY WIGGLY STARTS 4-STORE POS TEST OF BIOMETRICS

JULIE GALLAGHER

CHARLESTON, S.C. -- In one of the first major tests of biometric technology at the supermarket point of sale, Piggly Wiggly Carolina here has launched a 60-day pilot of a finger-scanning payment system at 50 checkout lanes across four stores.

Following a three-month installation and modification process, the system went live July 22 at each lane at two Charleston-area locations and two-Columbia, S.C.-area stores. Although expansion of the biometrics program is contingent on the pilot's success, Piggly Wiggly expects to roll out the system, from San Francisco-based Pay By Touch, to the remainder of its 120 stores over the next two years, said Rita Postell, spokeswoman for the chain.

"Piggly Wiggly expects checkout efficiency to increase by at least one-third," said Postell. "The system will also lower our check cashing fraud losses and add convenience for our customers."

Piggly Wiggly also contracted with Santa Clara, Calif.-based VeriFone and Armonk, N.Y.-based IBM to modify its existing VeriFone payment system and IBM POS system for use with the biometric technology.

Shoppers at the four test stores can enroll to use the system by providing a fingerprint scan, an access code, such as a phone number, and information on any financial account, such as a credit or debit card or checking account. After they've been enrolled in the Pay By Touch system, customers can use the biometric payment service at any retailer using the Pay By Touch technology.

To pay at the checkout, enrolled shoppers merely place their index finger on a finger-scanning device and punch in the access number to expedite retrieval of the finger-scan data, which is stored in IBM data centers, maintained by Pay By Touch. Once they are identified, their transaction is automatically linked to a financial accounts.

The biometrics system works by reducing a finger scan to a compact set of data; sensor technologies locate minute points in the data that correspond to distinctive features on the finger, allowing for a secure identity match.

Plans for the Piggly Wiggly pilot, first announced four months ago, were born out of a demonstration of the finger-scanning payment system at an industry conference attended by Rich Farrell, Piggly Wiggly's vice president of IT. "There were no other [food retailers] that had integrated biometric technology that I knew of," he explained. "At that time, I invited Pay By Touch in to develop a solution for our customers."

Pay By Touch's only previous food retail user is West Seattle Thriftway, a one-store independent that has used the system at 13 checkouts over the past two years, with more than 3,000 customers enrolled. Kroger is also known to have tested biometrics at the POS, but otherwise supermarkets have mostly used it as an ID tool for check-cashing. Prior to going live with the biometric system, "the technology was tested extensively in a lab at our headquarters and then out at the stores for four weeks," said Farrell.

Part of Piggly Wiggly's pre-pilot in-store testing involved about 400 users, including employees and customers, reported Postell, who described the phase as informal but successful. In preparation for the pilot, Piggly Wiggly also trained its cashiers so that they're able to assist customers if a problem arises.

Postell, one of the employees who tested the technology during the pre-pilot phase, doesn't anticipate too many challenges. "Although I was hesitant about the system at first because I didn't know how it would work, I used it. I didn't have to dig around in my purse. It was quick, easy and my finger scan went through like a charm."

According to Pay By Touch, the biometric scanners cost about $50 each. In addition, a typical per-transaction charge costs pennies and is negotiated with merchants.

Retailers using biometrics will need to allay some concerns about the technology, noted Caroline McNally, Pay By Touch's chief marketing officer. "Sometimes customers are apprehensive about their personal information and what will happen to it," she said.

To address this, at the time of sign-up Piggly Wiggly provides a privacy statement explaining that the system doesn't capture an actual fingerprint, but instead stores a set of data points that can't be reverse-engineered into a fingerprint.

More food retailers may be testing biometrics. According to SN's 10th annual State of the Industry Report on Supermarket Technology 18% of respondents said they will be testing or launching a biometrics system in 2004, compared with 4% who did so in 2003.