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eCommerce - Tuesday, October 26, 2004

Pay By Touch - Profile

HQ: San Francisco, CA

Founded: April 2003 (formed by merger of Indivos and Solidus Networks)

Management: Corporate structure is baffling after merger, renaming, etc. CEO is John Rogers. Craig Ramsey, an Oracle and Siebel vet briefly had the helm.

Investors: Closed $25 million Series B in June, bringing total invested to $37 million. The Series B included Mobius Venture Capital, the Gordon P. Getty Family Trust and private investors.

Business Model: Lose your ATM card? Doesn't matter. Pay By Touch is hawking a fingerprint scanner that connects you directly to your bank account. So, rather than swiping your card, you place your finger over a biometric scanner and enter your PIN. For consumers, the company claims, it's fast, free, and more secure than using a credit card. For merchants, it's low-cost and offers a better consumer experience. But merchants have to invest in hardware.

Competitors: Sony, Philips, IBM, Sun Microsystems.

Dirt: Something doesn't feel right about this one. Of primary concern to us is the general assumption this company is making: that the world actually needs this type of system. The problem with companies like Pay By Touch is that they (a) rely on major behavioral shifts in the way people buy things and (b) need to build and then push lots of hardware on merchants. Capital intensive businesses addressing speculative markets are SO 1998. We understand these types of applications in government/industrial settings where your primary customer is an entity like the Department of Defense. For example, check out the State Department's latest foray into the use of biometrics to streamline and improve passport authentication. For the consumer market, however, this is going to be a tougher slog.