Authentication & Security

Failure Story: What Happened to Pay By Touch?

A wonderful technology of the future, but poor vision to back it up led to the downfall of a startup.  This was the story of ‘Pay By Touch’; a company that offered innovative retail payments processing through Biometrics. In 2002, a technology based startup ‘Pay by touch’ received funding of $340 million from billionaires like Gorden Getty, Ron Burkle, and other prominent members of society like the lawyers, Business executives, top hedge funds,  Las Vegas Casino interests, and five of the National football league quarterbacks with a great vision of being a part of the future technology. All the efforts went in vain when the company filed for bankruptcy in 2007. A wrong captain at the wheel of the ship: CEO John P. Rogers was accused of domestic abuse, drug possession, and misuse of investor money.

The technology that Pay By Touch focused on was one of a kind when it started. Biometrics, the use of scanners to identify people via their fingerprints, faces, or even the retinas of their eyes. The company enabled people to pay with a swipe of the finger on a biometric sensor and provided secure access to checking, credit card, loyalty, healthcare, and personal information through the individual’s biometric features.

Pay By Touch combined two technologies - Biometric recognition and electronic financial transactions - to create an innovative way to pay for goods and services. However, there were certain difficulties faced during the time of implementation which needed a strong financial standing and planning to continue the operations.  One of the challenges was to shift consumers to ACH from the pin and signature based transactions. The cost involved with ACH was much lesser than the other versions, so Pay By Touch could not charge much per transaction. This had an impact on the operational costs which needed to be kept low.

Much of the company’s time was spent on improving the biometric authentication at in-store hardware, software level, and the hosted software level to avoid misidentification of a consumer as someone else. The other associated issue was ‘False Rejects’ which undermined the consumers’ confidence in the system. False Rejects were cases where the system rejected the genuine authentication attempts of the consumers.

It amazes people that the implementation of this technology was thought of way back in 2002, but due to poor vision and governance, it died. However, the concept is re-visited by companies like Apple and Samsung through the Fingerprint scanning, and Fujitsu, ZTE through the retina scanning. Though the latter is still not in the market, the technology is being fine-tuned for larger adaptation.

Shubha

Shubha has deep interest in studying the intersections of the physical world with the digital world and writing about it. She is a techno-commercial person, a gadget freak and she has worked at Amazon in the past.

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