Solidus Networks Inc.’s first bank deal is not for the payment technology the San Francisco biometrics vendor has been marketing for years, but for an unrelated product it acquired about six months ago.
The vendor is still trying to persuade banks to act as enrollers for the payment service, and it has sweetened its offer.
Last week Solidus said that Zions Bancorp. is testing its Paycheck Secure fingerprint product for authenticating noncustomers who want to cash payroll checks. The Salt Lake City company hopes to attract the unbanked and convert them into customers.
However, Zions is not using Solidus’ more well-known Pay By Touch system, which lets consumers authorize payments with their fingerprints.
Paycheck Secure was developed by BioPay LLC, a rival that Solidus bought in January.
Drew Hyatt, the senior vice president of credit and authentication services at Solidus, said that BioPay never marketed the product to banks. His company is pitching both Paycheck Secure and Pay By Touch to banks, though it has been offering them Pay by Touch for some time with little success.
Nine months ago Solidus created a sales unit focused on selling its biometric payment technology to the financial services sector, he said.
At the same time it changed the way it priced its payment system to banks. Solidus previously encouraged banks to serve as enrollment centers for the Pay by Touch system. People enroll in the system by providing their fingerprint and a payment method, such as a credit or debit card. Customers who enroll at bank branches are more likely to use that bank’s products with the Pay by Touch system, and the bank’s transaction volume and interchange revenue could rise as a result, Solidus said.
The vendor talked with several banks about enrolling customers, but none have agreed to do so.
When Solidus created the sales unit, it also started offering banks a piece of the revenue it receives for transactions initiated by customers who enroll at bank branches. (He would not say how what percentage it is offering to banks.)
And even though no banks have signed up to enroll Pay by Touch users, “now we’re getting traction,” Mr. Hyatt said.
Solidus is also talking to banks about developing a proof-of-concept biometric authentication device for the teller line. Banks and credit unions already use such devices as an alternative to looking at driver’s licenses; Solidus’ version would let the teller window serve as an enrollment station for Pay By Touch.
Zions has set up the Paycheck Secure device at a teller window at 12 of its 136 branches. It chose branches in areas where there are already numerous check-cashing businesses, and it is trying to undercut those businesses by charging 1.5% of the check amount.
On some paydays the teller window will be devoted to paycheck cashing. On other days it will function as a standard teller window. After a six-month test, Zions will decide whether to install Paycheck Secure at other branches.
LeeAnne Linderman, the executive vice president and director of branch banking for Zions, said the prospect of using the scanners to enroll people for Pay By Touch in Zions branches “was something that was mentioned in their original presentation,” but her company never pursued it. “To be honest with you, we haven’t even looked at it.”
Zions is no stranger to biometrics, she said; for at least five years it has used hand geometry scanners from Diebold Inc. of North Canton, Ohio, to control access to safety deposit vaults in some of its branches.
Edward Kountz, a senior analyst for financial services with the Jupiter Research division of Jupitermedia Corp. of Darien, Conn., said his skepticism about biometric payments is starting to fade.
Solidus’ “approach to the market has shifted,” he said. “They are, in fact, adapting. When the market doesn’t come to you, you’ve got to be able to adapt.”
Paycheck Secure is a much more marketable product than Pay by Touch, Mr. Kountz said.
Contactless cards, or even cash, are convenient alternatives to using a fingerprint reader to authorize payments at the point of sale, he said.
In contrast, cashing a paycheck is often a time-consuming process that involves checking driver’s licenses and fingerprints, he said. “There’s clearly an authentication need here. There’s no standard around it.”
Mr. Kountz predicts that some banks will eventually offer their branches as Pay By Touch enrollment centers, but Solidus might have more luck marketing Paycheck Secure first.
“It could be a crowbar in the door, so to speak,” to getting banks to look at other uses of biometrics in their branches, he said.
