Solidus Networks, Inc., the San Francisco-based biometric solutions company that did business as Pay By Touch, ceased processing biometric transactions on behalf of its retailer customers and consumer membership last week, a move it said was due to "lack of funding and current market conditions."

Pay By Touch's biometric payment systems were being used by dozens of retailers, including Pathmark, Piggly Wiggly, Jewel-Osco and Cub Foods. Last year it released its Smart Shop offering, first developed and piloted at independent grocer Green Hills, and then later launched at high-profile independent Dorothy Lane Markets.

On December 14, 2007, Solidus had filed for Chapter 11 bankruptcy protection. Solidus said as part of its planned restructuring it determined it could no longer support the biometric authentication and payment system. Other non-biometric Solidus Networks business units will continue operating, it said.

The company's move to pull the rug out from under the program came as a surprise to some, considering the successful track record it apparently with retailers.

At Dayton, Ohio-based Dorothy Lane, the Smart Shop loyalty and payment service was used in transactions totaling 24 percent of sales, just two weeks after it launched in July.

Green Hills, Syracuse, N.Y., saw similarly high levels acceptance of the technology among its shoppers, when Gary Hawkins, who owns Green Hills and is the c.e.o. of  technology company Hawkins Strategic, developed the Smart Shop loyalty concept and built the original proof-of-concept system, based on a Smart Shop loyalty card, which is still in place at Green Hills. Hawkins later sold the IP for the concept to Pay By Touch.

"We have known for many months that PBT was not in good shape and had begun making plans for the possible shutdown of biometrics at Green Hills some time ago," Hawkins told Progressive Grocer. "While PBT provided very short notice (not even 48 hours) we had a plan in place that was already under way. The termination of the biometrics and moving our customers over to SmartShop cards has gone very smoothly and without issue."

Meanwhile, Pay By Touch's Web site currently displays just one active page, with a statement from the company that reads in part: "Solidus Networks extends its sincere gratitude to the shoppers, merchants, vendors, investors, partners, and employees who have been supporting the company's vision since its first biometric payment transaction in 2002."

Observers commenting on a story that ran on the Web site of The Wall Street Journal about the demise Pay By Touch suggested that the business, not the technology, was the problem.

"I'm an ex-employee, and despite the eventual demise of the company, there were some interesting things learned about mainstream biometrics for the consumer," noted one online poster.
 
"None of the management of the company had any notion of businesses that wage world class technology competitions, as did the famous Silicon Valley successes," commented another. "The management all came from a so-called 'solution' business, where technology is secondary and services are the identity. Contrary to belief, the biometric technology was not designed in house. They really had nothing to compete with. So the company had no identity and was doomed to failure from the outset."

We'd like to hear what you think. Was it the company, or the technology that led to Pay By Touch's downfall? Send your comments to Joe Tarnowski, our tech editor, at jtarnowski@progressivegrocer.com