Fingers Pointed at Pay By Touch

  Some investors are pointing fingers at Pay By Touch, alleging recent moves by the biometrics expert's chairman have left the company "headless."
  San Francisco-based Pay By Touch is facing corporate turmoil relating to control of the company amid financial issues and an involuntary bankruptcy filing. The company provides its biometric payments, check-cashing and loyalty services to 2,600 merchant locations. Investors have pumped more than $180 million into the company.
  Four petitioners filed the involuntary bankruptcy suit against Pay By Touch, whose corporate name is Solidus Networks Inc., for wages of more than $45,000, according to court documents filed on Oct. 31 in the U.S. Bankruptcy Court for the Central District of California. Creditors can file involuntary bankruptcy against a company to force it to pay money it owes.
  On Oct. 19, Plainfield Special Situations Master Fund Ltd. and Plainfield West Investments LLC, investors in the company, filed a complaint in the Chancery Court of Delaware, where Solidus is incorporated, accusing Chairman John P. Rogers of several infractions. Among the allegations is that Rogers took "erratic actions" to remove members of the Solidus board, including CEO John Morris and Chief Operating Officer Eula Adams, "essentially leaving the company 'headless,'" or without leadership.
  Shannon Riordan, Pay By Touch vice president of marketing, says the company is operating "business as usual," and there are no changes in the support of Pay By Touch's products and services.
  Riordan was cryptic regarding how Pay By Touch would respond to the bankruptcy filing. "We have the next 20 days to strategize about how we're going to respond," she says. "We are confident this is just a bump in the road."
  Meanwhile, Rogers also filed for bankruptcy in documents dated Nov. 1 with the U.S. Bankruptcy Court for the Central District of California. Rogers owns 64% of the company's stock, according to the documents filed in the Delaware court. Riordan would not comment on Rogers' bankruptcy filing or on rumors that Pay By Touch employees are not getting paid.
  Rogers formed Pay By Touch in 2002.
  Despite Pay By Touch's internal turmoil, Shell Oil Co. in early November announced that 10 Chicago-area Shell gasoline stations have begun testing the company's fingerprint-data verification for payments at the point of sale. The stations are deploying fingerprint scanners in their convenience stores and at their pumps.
  Each store also has a kiosk where customers can enroll by placing a finger on a reader, which creates an algorithm that is stored and matched against algorithms made when customers place their fingers on readers to initiate payments using the system. Consumers can enroll with a proprietary Shell credit card, a Shell MasterCard, or account and bank-routing information from a personal check, all of which cost Shell stations less to accept than cards that do not carry the Shell brand.
  Chris Suess, Shell manager of global refueling innovations, says Shell is conducting the test to provide "a more convenient, speedy and secure transaction process" and to reduce costs through lower transaction fees.
  Suess could not say whether the program will roll out nationally. "We hope that it does and, assuming the pilot goes well, we could be at stations nationwide as early as fall 2008," Suess says.
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