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In another unintended consequence example, contactless payment and mobile payment efforts seem to have stunted the growth of retail biometrics. Is this a marketing fault or the death of an idea that never had much of a chance? A few years ago, retail biometrics had what seemed to be a very bright future. They promised superior security and a permanent CRM association. If that customer switched credit cards, moved to another state, changed their name and changed cellphone companies, the fingerprint would still allow all purchases to be associated with an individual customer. Read more.
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Over the last month, I've been struck by an unusually large number of reader E-mails that fundamentally question whether E-Commerce will ever truly work: Whether it will consistently make money, be profitable and be, well, worth all of the effort.
If the slip of a lip can sink a ship, perhaps a retailer's flick of the click can kill a prestigious campaign mighty quick. The best way for a retail chain to make a customer happy is to offer him/her a program that few others can get. And the best way to undermine that—as Best Buy discovered on Wed. (Sept. 3)—is to then accidentally make that offer to every single reward customer you have.
It looks like Amazon is no longer backing up its pricing, putting an end to its Post-Order Price Guarantee — a policy that allowed customers to recover the difference from an Amazon price drop within 30 days of a purchase. As of Monday (Sept. 1), customers who place orders on Amazon.com are not offered the 30-day guarantee, a customer service representative confirmed.
Security is nothing if not filled with seeming contradictions, and the latest version of PCI—slated to be officially unveiled next month (October)—is highlighting a beauty: To most effectively protect payment-card-related systems, protection must be focused on anything that is not related to payment card data.
Quite a few retailers have been involved in site changes to make the Web more accessible to those with vision difficulties, but Target has been the most aggressive in fighting such efforts. As such, Target's settlement has an especially strong chance of pressuring retailers to aggressively embrace such changes.
Wal-Mart on Wednesday (Sept. 3) launched what it dubbed the Walmart Smart Network—a series of next-generation digital-ad systems—to 2,700 stores. The funky aspect of this rollout is that all 27,000 screens will be centrally controlled via an Internet Protocol Television connection.
Site navigation problems and unpleasant booking engines are driving customers away from online travel sites and pushing them through the doors of traditional, more personable travel agencies. Even though sales for online travel sites are growing, fewer travelers are actually booking their trips online.
A TJX senior executive is apparently trying to push chip-and-PIN, arguing that cyberthieves are focused on the United States partly because we haven't adopted it. "Criminals, I believe, are focusing on the countries that haven't added that higher level of security," TJX Vice Chairman Donald G. Campbell said.
Calvin Klein finally gave its HTML blessing to E-Commerce, offering its first for-sale items on its Web site, although the E-Commerce launch is U.S.-only. Anyone visiting from outside the United States will be routed to the existing corporate brochure site.
It seems clear that most retailers are adopting one of two distinctly different strategies when it comes to data security and compliance. Let's label them Cost-Effective Compliance (CEC) and Compliance-Driven Security (CDS). Both approaches are based on best practices and solid risk management principles. But, GuestView Columnist David Taylor argues, they lead to quite different spending patterns, technology decisions and business cultures.
A retail IT lesson from the world of politics? Maybe. Web tracking firm Keynote was studied the text message blast sent by the U.S. presidential campaign of Barack Obama, the one in which his campaign promised to tell supporters his VP selection before it was broadly announced.
Has Amazon decided what it wants to be when it grows up? More to the point, are there indications that it has now decided that one thing it does not want to be is yet another thin-margined retailer?
The IT chief at Netflix has pointed the finger of blame for its site problems last month at "a database corruption event in our shipping system." The problem prevented customers from receiving their DVDs for about three days.
Almost a year after TJX settled with banks and bank associations impacted by the worst data breach in credit card history, another bank has come forward with its own lawsuit against the retailer, claiming the incident compromised some 4,000 of its customer accounts.
The number of data breaches reported as of Aug. 22 of this year has already surpassed the total number in all of 2007, including a new one from Macy's impacting some 4,100 customers.
On the best-paid list of CIOs at publicly held companies, Best Buy's Bob Willett ($4.7 million), Home Depot's Bob DeRodes ($4.3 million) and Kohl's Thomas Kingsbury ($2.5 million) stand at the top, doing the pocket-protector crowd proud.
With the frequent product changes executed by any large e-tailer's site, the tech hurdles of launching a mirror site in another language can be daunting. But this challenge has created a small industry of companies that are trying to facilitate rapid globalization for e-tailers.
JCPenney is testing the Australian waters a bit with an online push. The retailer has a local URL and an Australian company handling all operations, but it's still shipping merchandise from the States and asking Australian shoppers to wait "12 to 14 working days. This "request" prompted one Australian publication to ask "whether Australians would be prepared to wait two weeks to receive something purchased online."
In an overall down market where the 150-store Nordstrom chain is seeing a 4.3 percent sales drop, online operations are accounting for 15 percent, hitting almost 8 percent of all sales. Company execs there now project online to soon top 10 percent.
The new version of PCI due out in October will let the outdated WEP wireless security standard stick around for almost two more years, while also reducing the required frequency of firewall rule reviews.
It's late on a Friday night and as Jane Smith walks into her local grocery frozen food aisle, she notices a neighbor walking away carrying a frozen pizza, right near a digital advertisement for 20 percent off of a Budweiser six-pack. Jane reaches into the freezer to grab her favorite Hagen-Dazs vanilla ice cream but notices that the digital ad instantly changes to hawk 40 percent off fresh apple pie in the bakery section.
It's generally accepted that any key economic issue—whether it's a housing slump, rising gas prices or tax refund checks—can have a sharp impact on business spending. But the IHL Group is floating an interesting theory that recent gas price hikes are going to have a very specific and direct impact on IT spending next year.
After years of trials with only the rarest evidence of CFO-friendly RFID ROI, shelf stock monitoring is quickly emerging as "the first major application of RFID in retail with a strong business case," according to a new report from London-based RFID analyst firm IDTechEx.
While North American retail execs are planning for trivial—if any—IT investment increases this year, with "more than one-quarter of retailers expecting lower IT spending," more than half of their Asian Pacific counterparts are preparing for significantly higher IT spending, according to new Forrester numbers released this week. A bit of the Tortoise and the Hare perhaps?
A gang of data thieves in Ireland has well learned the lesson that the best place to hide is in plain sight. The group hit a large number of retailers throughout Ireland and grabbed more than 20,000 payment cards by placing skimmers on card-swipes by wearing what appeared to be maintenance uniforms and saying that they were performing bank repairs.
These days, when U.S. government officials want to ask questions about privacy and data security, it's never clear if they want to protect consumers' privacy or learn the best way to violate it themselves. But retail execs who want hints can drop by a Sept. 22 hearing at the U.S. Federal Trade Commission's Washington, D.C., headquarters.
Retailers who are worried about RFID security problems will have more details available to them now that a federal judge has killed a gag order on MIT students who had identified flaws in Boston's contactless RFID subway cards.
Based on the PCI Standards Committee's official hints about what will be in the 1.2 release, it appears that clarifying when and how virtualized servers can be PCI compliant didn't make the cut. But before the server and security geeks start lighting their torches and getting all "vigilante" on the card brands, let GuestView Columnist David Taylor make his case for why it won't matter in the slightest.
As major chains are doubling up their focus on computer-savvy young consumers, some are finding their aversion to avatars giving in to their adoration of avarice.
A "persistent and mysterious technical glitch" has severely disrupted business operations at the massive online film rental site Netflix, "potentially affecting millions of its customers."
September 7th, 2007 at 12:23 pm
Interesting story but one key point was overlooked: Visa and MasterCard’s refusal to create a biometric interchange rate that reflects the consumer present and low risk nature of biometric payments. It is a tough sell getting retailers in a slim margin industry like grocery to embrace paying the card not present interchange rate. In the current climate of PCI security and data protection one would think the card associations would embrace this technology as another tool in thwarting data thieves and provide incentive for biometric adoption.
They have not.
It is not that the Associations have an aversion to overcomplicating interchange, the last time I counted there were 298 interchange classifications with additional ones released like clockwork two times a year. 298 but they cannot create one for biometrics.
Why? The only reasons I can figure:
1) The substantial investment they made RFID which is a competing technology.
2) The potential to drive many of these transactions away from branded debit cards to ACH transactions which is a competing and cheaper payment method.
3) Protection of brand identity. Visa and MC want people to look for their logos not Pay By Touch’s.
I know little about anti-trust law but I would be interested to see what would have happen if PBT ever decided to pursue anti-trust litigation against the card assocations.
September 7th, 2007 at 12:50 pm
Another reader saw this story and wanted to post a comment, but was traveling and he asked that I post it on his behalf. I am now doing so:
I enjoyed reading your article about biometrics. I couldn’t agree with you more. The unfortunate thing is that investors put over $280 million into Pay By Touch which is now hurting other promising companies in the biometrics market because of its apparent failure. I do want to let you know that our first product, a joint product with Master Lock, called the Master Lock smartTOUCH garage door opener will go on sale through the Home Depot in 3 weeks. The HD ordered over 40,000 units and is rolling out the product nationally in October.
We have always taken the position that once consumers have had time to play with, understand, and get use to this technology, other forms of biometric usage, such as “retail biometrics” could have a chance of greater acceptability. I though Pay By Touch was about 5 years too early. Good thing for us is that we will have 40,000 installations in homes by the end of the year. At that time, the biometrics market can better gauge consumer usage and acceptance of the technology.
Anyway, I enjoy reading your articles.
Mark R. Basile
Chief Executive Officer
BioMetrx
September 7th, 2007 at 2:43 pm
I would like to make one slight correction from Mr. Burek’s quote:
‘Supermarkets, he said, are simply not going to ever get that. True enough, although in fairness, Disney will never sell me a TV dinner.’
Kroger’s sells Disney braded frozen products:
July 25, 2006 Kroger Press Release
Favorite Disney characters are making their way onto Kroger store shelves nationwide this month. The Kroger Co. (NYSE: KR) and Disney Consumer Products (NYSE: DIS) today announced an exclusive new line of Disney Magic Selections-branded products featuring Disney and Disney·Pixar characters on competitively-priced food, health and beauty items. The first products to launch include a food line offering healthy alternatives. Baby and toddler products, personal care and floral items will launch in 2007.
Thanks,
Tim McAdams
SUPERVALU
September 7th, 2007 at 3:51 pm
The truth is, in February, of 2007, research conducted on behalf of Unisys, by the Ponemom Institute concluded: “an even greater percent of U.S. consumers (69 percent) and U.K. consumers (92 percent) would prefer that banks, credit card companies, healthcare providers and government organizations adopt biometric technologies, as compared to other protection measures such as smart card readers, security tokens or passwords/PINs, to safely and quickly verify personal identities.”
Here are the facts: The main benefit of Pay By Touch is NOT speed and convenience, albeit, that is a benefit. It is NOT increased security, although that certainly is a hot-button with consumers.
It IS the reduction of transaction fees. Fees that the merchants/ retailers can keep as profit from their hard work. Profit that is being taken by V/MC.
Use, as a prime example, gas stations. A Visa interchange rate of 2% +.10 cents, on a 20 gallon fill-up equates to .90 cents. (When gas was $2.00 a gallon)
However, at $3.00 a gallon, the same 20 gallon fill-up today, costs $1.30. Using .10 cents a gallon profit margin, that’s about 65% of the profit, up from 45%…without V/MC doing ANYTHING except benefiting from their rates.
I think the first comment by David is on target regarding the “card not present” fees. A card not present rate is riskier, thus costs more to process. Therefore, if the rate is based on risk, how can a biometric transaction, which is inherently “more secure” than a “card present” situation, cost more to process than a “card present” transaction?
I believe he’s also right about the potential collusion/anti-trust lawsuit by Pay By Touch against V/MC. He might not know a lot about anti-trust law, but history tells us that Visa and MasterCard have been found guilty more than a couple of times.
V/MC aren’t Rocky or Rocky II when it comes to those fights. They lost the original fight, to Walmart/Sears, over debit card fees, then they lost the appeal. Then it became Rocky 3 Billion dollars in settlements. Then they lost the Rocky 4 fight with the Discover/AMEX lawsuit and didn’t even make Rocky 5 when they had their appeal denied.
It’s interesting to note that Discover was one of Pay By Touch’s first strategic partners. And their most recent is Citibank.
At the end of the day, the contactless cards can lost, stolen or misplaced. And, no, a severed finger won’t work with Pay By Touch.
September 7th, 2007 at 4:25 pm
Pay By Touch took in well over $280M…by my last count…but to their credit 2 years ago started running away from biometrics and buying into loyalty, buying Catalina loyalty systems for one and laying down coupon kiosks….Sooooo…Pay By Touch might make it through all this but change their name to PBT and all could be forgotten