Pay By Touch puts its finger on ID verification system

Online shoppers can use a fingerprint scanner to be identified by vendors

Credit card processing and in-store biometrics vendor Pay By Touch today launched a new identity verification service aimed at giving online shoppers a secure, fast and free way to make purchases by using their fingerprint to verify their identity.

The service, called TrueMe, uses a fingerprint scanner to verify a buyer's identity for e-commerce businesses that are registered and equipped to participate. The service can help companies reduce fraud-related losses and better protect customer data from online thieves, according to the company.

Other vendors have offered fingerprint readers to protect online transactions, said Jon Siegal, an executive vice president at San Francisco-based Pay By Touch, but those products didn't incorporate a tight certification process and vendor participation. "Most of them were positioned as convenience toys for users," he said.

The difference with TrueMe is that Pay By Touch has relationships with brick-and-mortar stores and online retailers through its credit card processing business, as well as other business relationships through its customer loyalty card operations. As a result, the company expects to attract a wide range of businesses -- including retailers, banks and brokerages -- to offer the service, he said. The company also provides real-time fingerprint scanning services inside 2,400 retail stores, banks, convenience stores and other locations in 44 states.

The small fingerprint scanners used by the system are already being integrated into laptop computers, including Lenovo products. They will also be available as a USB-powered device that plugs into a user's computer and costs less than $30. The stand-alone biometric scanners are provided by Emeryville, Calif.-based vendor UPEK Inc.

TrueMe allows users to skip the old-fashioned process of logging in with usernames and passwords, instead allowing online shoppers or customers of other businesses, such as banks, to swipe a finger over a fingerprint scanner in order to be identified and authenticated as a legitimate customer. Once a customer is authenticated through a secure connection between the scanner and Pay By Touch's servers, his purchases or other transactions are processed.

People have too many usernames and passwords to manage safely, Siegal said. And for businesses, resetting lost usernames and passwords can be a costly and time-consuming issue. The worst problem, though, is that usernames and passwords can be intercepted by thieves using keylogging software or other technologies.

"The security problem today and the threat level are much higher than they were four or five years ago," Siegal said.

Pay By Touch plans to leverage its existing relationships with stores and banks to offer potential customers a range of options, he said.

Business services vendor Inc. will be offering the authentication services to its employees and customers later this month, Siegal said. "There will be people using it in November," he said. Fees for the services are expected to be paid by merchants in much the same way they pay for credit card processing services. Consumers will not directly pay for the authentication services, he said.

Roger Kay, an analyst at Endpoint Technology Associates Inc. in Wayland, Mass., said that Pay By Touch's plan for a secure fingerprint ID system "seems good or likely to work" because the company has deep connections with many retailers, banks and other business that would be interested in transaction security. "If you look at this, I would say that it's got a better chance now of working than of any time in the past," Kay said. "I think they're well positioned."

Tom Elliot, an analyst at Strategy Analytics Inc. in Newton, Mass., acknowledged that TrueMe offers security benefits, but he wondered whether customers would plug a USB fingerprint scanner into their computers so they could use the technology. "I haven't seen any [data] that people are buying less online" because of security worries, he said.

On the other hand, Elliot said, if consumers can "take a reasonable step" and buy a plug-in fingerprint scanner for less than $30 and use it to increase their security online, then maybe they would go for it. "The security story is pretty good," he said. "It sounds plausible to me."

Copyright © 2006 IDG Communications, Inc.

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