Why Piggly Wiggly Went with Biometric Payments

Piggly Wiggly Carolina Co., a Charleston, S.C.-based chain of supermarkets with stores in South Carolina and Georgia, has adopted a payment system secured by biometrics primarily to increase its share of technologically savvy, white-collar customers. “It sends a message that we're trying to be cutting edge,” says David Schools, senior vice president for the grocery chain. “It's about trying to appeal to a broader demographic that might be interested in this technology, and we'd get additional share of (their business) if we were first in the market.” Pay By Touch, San Francisco, announced last week that Piggly Wiggly Carolina had adopted its fingerprint-payment system, which replaces cards and checks with a network that links fingerprint scanners at the point of sale to a database of payment accounts designated by customers. Piggly Wiggly will have all lanes in four stores on the system by July for a 60-to-90-day test, and plans to roll it out to most of its remaining 116 stores within 18 to 24 months, Schools says. These installations will represent the first announced commercial rollout of Pay By Touch's system, which is currently in operation at a supermarket in Seattle and at a handful of video stores. Another important consideration in adopting the technology, Schools says, is that merchants can use it to influence customers' choice of payment type, and so reduce transaction costs. After enrollment, customers pay by touching a fingerprint scanner, which causes a series of payment accounts they designated at enrollment to scroll on a payment terminal. Merchants can control the order of scrolling, and customers often choose the first one displayed. Merchants can use this to shift customers from credit to online debit accounts, and also to electronic checks cleared through the automated clearing house system. Once Pay By Touch's network authenticates the customer, transactions flow through the payment-processing networks the merchant has contracted with. “The cost of credit card transactions has gotten outrageous,” says Schools. “We're looking at this as a way to communicate to customers that there are other (payment) choices out there.” Though Pay By Touch transactions are priced by the bank card associations as card-not-present payments, which carry higher interchange rates than conventional card transactions, Schools says he isn't worried about higher costs. “It's a short-term concern, but over the long run it gives us leverage to deal with the credit card companies,” he says. “Credit cards could lose more share at the point of sale.” Schools will not say what percentage of Piggly Wiggly's transactions are currently on credit cards, but says it is less than 10%. Schools also cites ease of customer sign-up, falling prices for fingerprint scanners, and smooth integration as reasons for his company's decision to adopt the technology. “We've been keeping our eye on it at trade shows, but until now we'd not felt it was developed enough,” he says. Scanners now run about $40 apiece in quantity, and Pay By Touch has been subsidizing their cost. At the same time, the biometrics company formed a marketing alliance with IBM Corp. in January to run its data center and help install the system at stores, easing integration issues since IBM terminals account for about 70% of installed POS systems. Pay By Touch charges merchants a fee of 5 to 10 cents per transaction.