PIGGLY WIGGLY UPBEAT ON BIOMETRICS 2004-10-18 (2)

JULIE GALLAGHER

ORLANDO, Fla. -- Two-and-a-half months after Charleston, S.C.-based Piggly Wiggly Carolina began piloting a biometric payment program in four of its stores, 15% of customers have enrolled. Also, 18% of non-cash payment transactions in those stores are being handled via the program.

These results were reported by Rich Farrell, Piggly Wiggly's director of information systems, at Food Marketing Institute's Electronic Payment Conference, held here at the Walt Disney World Swan Hotel Oct. 5 to 7.

The biometrics technology, from San Francisco-based Pay By Touch, allows enrolled customers to access financial accounts by placing their fingerprint on a reading mechanism and punching in a personal access code, such as a phone number.

The system is now used at two Charleston-area locations and two-Columbia, S.C.-area stores. Further implementation plans are expected in the near future, he said.

The system has drawn new customers to the store, reported Farrell. "People really like it. It's something different that no one else in our area is offering," he said. "Cashiers hardly know when a customer initiates payment through the technology. It's like any other transaction."

One unexpected result is that "we've had people who haven't enrolled in the program try to swipe their finger at the POS," he said, eliciting laughter from the conference audience. The chain, which runs 120 stores, is researching what to do if the system goes down and a shopper, expecting to pay via finger touch, doesn't have her wallet.

The biometrics program has helped Piggly Wiggly to promote the use of the ACH (Automated Clearing House) payment processing system, which employs data from paper checks to electronically deduct funds from a customer's checking account.

Aside from cash transactions, ACH is the least costly payment mechanism for merchants. However, Farrell didn't provide specifics relating to interchange fees.

The biometrics system promotes ACH transactions by presenting the ACH option to shoppers before debit and credit options. Tens of thousands of ACH transactions have been initiated by the biometric system so far, said Farrell.

Comparing the payment methods of biometrics customers who use ACH payments with the method they used prior to its installation, Farrell said the biggest conversion took place with customers who had paid with PIN debit cards and checks.

Farrell acknowledged the adoption of ACH-based biometric transactions has been slower for credit card users. Credit card transactions have the most costly interchange fees. "A few credit card customers have begun paying with ACH transactions," he said. "It's promising since we want to motivate customers that pay by credit card to use ACH transactions."

Currently, only one of the Charleston stores gives customers the option to pay with a credit card. "We've incorporated credit card payments [with biometrics] in one store because a large part of the customer segment paid with a credit card and we wanted to include them" in the program, said Farrell.

Future plans include work toward the creation of incentives for customers who use ACH transactions. "You need a check in order to enroll in ACH with the system," said Farrell. "Because these customers pay with debit cards, a lot of them aren't carrying checks at the time of enrollment."

Although employees handling enrollment ask these customers to return with a check, they don't always comply. "A lot of customers bring a check back the next day, but some don't come back," stated Farrell.