The biometric payments company Solidus Networks Inc. has struck a deal to make Citigroup Inc. its exclusive financial partner in Singapore.
The San Francisco vendor has long wanted to use bank branches in this country as enrollment centers for its Pay By Touch payment system, and though it has had little success to date, Solidus said that the Singapore deal could give the idea a boost here.
Under the deal announced Thursday, Citi’s Singapore unit, Citibank Singapore Ltd. will enroll customers in Pay By Touch at its branches, but they must do so by providing a Citi credit card number. Only merchants that use Citi as their card acquirer can offer the service as a payment option.
Drew Hyatt, Solidus’ senior vice president of card and authentication services, would not say whether this exclusivity is written into its contract with Citi or how long the exclusivity would last.
“We had to start somewhere,” he said, “and even Citibank knows that eventually we’re going to have to work together to let other banks into this network.”
Citi began testing the system with employees in Singapore three weeks ago and began offering it to consumers on Thursday.
In the United States the system is already running at numerous merchants and is not exclusive to any bank. Consumers enroll at merchant locations by providing their fingerprint and payment data for any credit card or checking account. They can then authorize payments with their fingerprint.
From the system’s early days, Solidus has tried to entice banks to act as enrollment centers. It said any bank that chose to do so would be able to influence its customers to use the bank’s own cards for their Pay By Touch payments.
But U.S. banks have not been as receptive to the concept as Citibank Singapore, with its promise of initial exclusivity, has been, Mr. Hyatt said. “Now the question is, How do we go about implementing it” here?
“In the United States, we started out with a very merchant-focused approach,” Mr. Hyatt said. In addition to using merchant locations as enrollment centers, Solidus developed software that can be used for a loyalty program. Stores using the Solidus software can tie purchases to individuals instead of households, since a fingerprint, unlike a loyalty card, cannot be shared among family members.
In this country, Solidus hopes to repeat that success by offering banks exclusivity, just as it did to successfully woo Citi in Singapore. Mr. Hyatt said that if a bank agrees to offer Pay By Touch, his company will guarantee it is the only one in that region with that capability. Solidus is talking with three regional banks and one credit union about this new model.
Solidus does have a deal with a U.S. bank, but not for Pay By Touch. In July, Zions Bancorp. began using another product, Paycheck Secure, to authenticate noncustomers who cash payroll checks drawn on a Zions account. The system is not connected to Pay By Touch and was originally developed by BioPay LLC, which Solidus bought in January.
Dan Schatt, a senior analyst for the Boston market research firm Celent LLC, said that although Solidus may have some success with its new strategy in the United States, “Singapore is a different market … [it] is heavily electronic and you’re hard-pressed to use cash.”
Mr. Schatt, who worked in Citibank Singapore’s corporate finance division from 1998 to 2000, said that Singapore is more densely populated than the United States, and its citizens already associate Citibank with technology.
“People are very image-oriented there, so brands really matter,” he said. In addition, “everyone is on the Internet, everyone is using technology, and everyone’s pretty much banked.”
In the United States, merchants that have supported Solidus’ system may not like giving banks control over the enrollment process, Mr. Schatt said. Banks may promote the use of their credit cards, while some merchants may prefer consumers to link the payment system to their checking accounts, because the automated clearing house debits to these accounts are less costly to process than cards.
Christine Barry, a research director at Aite Group LLC of Boston, said there is value for banks to offering the Pay By Touch system. “This helps keep banks in the loop for payments” when so many other payment systems, such as PayPal Inc., put another brand in front of the consumer, she said.
The offer of initial exclusivity in the bank’s region makes the offer even more compelling. “It might make it more attractive for a bank to be the first one to partner” with Solidus, she said. “It makes the bank seem more cutting-edge.”
