The Catalyst Code

With its ejection from Piggly Wiggly (not to mention its bankruptcy), Pay By Touch is pretty much dead as a new payment system.

It all sounded so clever. People registered their finger and associated it with a method of payment. Then they could pay at participating merchants like Piggly by pressing their finger on a POS device. I haven’t checked the precise numbers recently but I believe it secured about $300 million of VC funding. The idea was that people would truly “never leave home without it.”

I have to say that it was a predictable disaster (lots of VCs I’ve talked to who heard the Pay by Touch pitch couldn’t believe anyone with half a brain would sink any money into it). A payment system has to get merchants to take the method and consumers to use the method. Pay by Touch required merchants to install completely new technology at the point of sale and to install kiosks for consumers to register. Consumers had to spend a lot of time registering information on kiosks without any real incentive to do so. They then had to pay using a method that essentially fingerprinted them at the point of sale. Not to mention having to watch the person in front of you in line do the same thing with their dirty finger on the pad that you had to step up and use next. Yuk. Too many barriers to getting both chickens and eggs on board, even when merchants were given the kiosks to install.

Contrast that with Revolution Money and Tempo which may not have something as slick as paying by finger but have cards that largely work with existing point-of-sale equipment and that don’t require consumers to switch to something completely new. But even they’ll tell you how hard it is to get both merchants and customers to take a new card, but at least they have a shot. Pay By Touch, for all the hype, didn’t offer enough value to merchants or consumers to get them to switch to something new.

Does anyone think that Pay By Touch could have done anything different to ignite a catalytic reaction?