Think Computer Corp. is adding digital coupons to FaceCash, a mobile payment system that it says fights fraud through a facial-identification system.

The Palo Alto, Calif., vendor is offering merchants an advertising model called cost-per-action in which they pay for a coupon only if consumers redeem the coupon through the FaceCash mobile app and complete a purchase using the coupon.

"Advertisers don't have to pay for ads that don't work" — but they pay more than the average price for the ads that do work, said Aaron Greenspan, Think Computer's founder and chief executive. "We get to collect a higher premium per coupon used because we can guarantee that it resulted in a sale." Greenspan would not reveal the premium.

FaceCash established what it deems "a simple" merchant-fee structure based on a cost-per-action model. The merchant fee on coupons used by repeat FaceCash customers is 30% of the coupon's value. For new customers using coupons, the merchant fee is 50% of the coupon's value.

Greenspan claims his company's technology uniquely positions it to offer this system and enforce that pricing. "Generally … no one else has the technology to track everything as accurately as we do," he said.

Consumers using the FaceCash application first must register online and link their FaceCash account to a valid bank account. To initiate a payment, the user calls up the bar code needed to complete a transaction from the FaceCash account on the app's home page. The bar code also contains the user's digital image uploaded during account registration.

After the clerk scans the bar code, the user's image appears on a computer screen that is part of the merchant's point of sale system. The merchant uses that image to verify the customer's identity and complete the transaction.

Think Computer routes the transactions through its internal database and not the automated clearing house system. The database moves funds between the user's account and the merchant's account. The company holds consumers' funds in a prepaid account and uses those to settle the transaction. Think Computer sends nightly batches to the merchant with each day's earnings.

The coupon system initially is available through an Apple Inc. iPhone app. Think Computer plans to release updated apps for Research in Motion Ltd.'s BlackBerry phones and those powered by Google Inc.'s Android mobile operating system.

Ten Palo Alto merchants, mostly restaurants, accept FaceCash today.

"Most of the merchants we have signed up already have expressed an interest in listing coupons," Greenspan said, and some have submitted coupons to FaceCash's system.

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