There is no question the so-called "cashless society" has arrived, as it is now possible to purchase just about anything with a plastic payment card. Today, travelers can hop on a jet and go anywhere in the world, at the last minute, with just a passport, a credit card or two, and a few bucks for tips. But imagine throwing away your wallet. The next frontier, the "cardless society" may not be far off. Using your fingertip, face, voice, or eye along with your personal secret number you may be able to pay for stuff worldwide, verify your age or driving status and prove your citizenship. The world of biometrics is advancing quickly and will soon be able to integrate with payment systems.

This month, an Oakland, California company was awarded a another patent for technology developed using biometrics for processing electronic financial transactions. VeriStar's "Pay By Touch" payment service is based on sixteen patents issued to-date.The service enables consumers to pay for goods and services either at the point-of-sale, ATM or over the Internet using only a biometric for authentication. Last month, two other San Francisco-area companies, SecuGen Corporation and TouchCredit Financial Services, teamed up to deliver a "Cardless Credit" payment system that uses fingerprint recognition technology to enable consumers to purchase online products and services.

Whether fingerprints will be the biometric of choice is a matter of debate. A recent study showed that iris recognition technology outperformed six other biometrics systems - facial recognition, fingerprint, hand geometry, vein and voice recognition - on accuracy and processing speed. Iris recognition technology also boasted a false rejection rate of 1.8% overall - the lowest of all those tested - with no users experiencing a false rejection after three attempts.

Another biometric system, called LiveGrip, uses infrared light to look into an individual's hand. Like an x-ray, it uses this image to compare against a computer database allowing access to a building, room or a network. The system developed by Washington-based Advanced Biometrics could also be used to approve a financial transaction. When someone grabs the LiveGrip device, infrared light takes a digital picture of the inside of an individual's hand. A computer then analyzes the data and since no two hands are alike, the computer can make a positive identification of that individual.

Biometrics will continue to be a hot area in the next few years as payment cards move into the next generation.

SMART CARD MOMENTUM

Smart payment card issuance is steaming ahead with an expected 14 million VISA and American Express smart cards to be in use by year's end nationwide. The infrastructure to harness the power of the card's chip for payment within the USA is also beginning to build. This month VISA, Bank of America and Vital Processing Services teamed to provide smart card acceptance services at two POS merchant locations. Although a baby step in building merchant acceptance, momentum will quickly build during the fourth quarter and the first half of next year, as Target develops its smart VISA program. Based on the latest industry intelligence, slightly more than seven million AmEx 'Blue' cards have been issued since the card's launch two years ago. VISA says it expects about seven million smart VISA cards to be issued by year's end. Providian, the biggest cheerleader of the smart VISA card, broke through the one million card level in June, and intends to migrate nearly all its 17 million accounts to smart cards. Combined, Fleet and First USA have issued less than one million smart VISA cards to-date. The VISA/BofA/Vital announcement involves smart card acceptance at the employee cafeterias located within VISA's offices in Foster City, CA. and Vital's in Tempe, AZ. Vital is the first U.S. merchant payment processor to be ready to process smart VISA transactions and has developed a terminal application to enable BofA merchants to accept smart cards at the POS. Vital will authorize, capture and clear the chip-based merchant transactions with Bank of America Merchant Services Group providing transaction acquiring. Hypercom's smart card enabled touch-screen ICE card payment terminals will process the VISA and Vital chip-based transactions.

BETWEEN POCKETS

The Trial Lawyers for Public Justice this month formally challenged a proposed national class action settlement of credit cardholders' overcharge claims against Bank of America. The group says Bank of America has simply taken money out of one pocket and put it into its other pocket. The proposed settlement in Boehr v. Bank of America requires cardholders and class members to prove by documentary evidence that the Bank received their payments on or before noon on the date they were due. The settlement guarantees of at least $500,000 going to the Bank of America's Consumer Education Fund. The Boehr class action was filed on behalf of 8 million current and former Bank of America credit cardholders whose payments the bank did not credit on the date of receipt. The settlement creates a fund of $1,316,700 to be distributed among five charitable organizations. The settlement also creates a $1.875 million damages fund to be distributed among class members who can prove that the bank received their payments before a certain hour on the date the payment was due. The TLPJ also contends that the notice provided to the class members was inadequate and that the $1,583,300 in attorneys' fees sought by class counsel is excessive.

MICROSOFT DISTRUST

A new study released this month found one-third of online consumers are very concerned that Microsoft will not keep their personal and credit card information safe and secure, and that the software giant will sell their personal information to other companies without first consulting consumers. Only 15% affirmatively trust Microsoft to properly protect their credit card and other personal information according to the survey conducted by Gartner, Inc. Despite all the hype over Microsoft Passport, consumers are largely disinterested or distrustful of the service. Passport enables consumers to sign on across Web sites with just one user ID and password, and in the future it will be used to personalize and customize consumer access to a wide range of Microsoft Hailstorm Web services, such as calendaring and shopping. According to 8 million consumers who say they already signed up for 'Passport', the main reason they registered is get access to other Microsoft services such as Hotmail e-mail. Consumers are much more interested in 'Passport's' basic feature - single-sign-on - than they are in personalized web services that will be offered by 'Hailstorm' and enabled through 'Passport'. Ninety percent of online consumers say they are not interested in sharing personal data in exchange for personalized services.

SUB-PRIME DATABASE

Consumers with scant credit histories may soon be receiving unsecured credit card offers in the mail. Consumer credit reporting firm Experian has signed a deal this month to begin drilling into the debit information in eFunds' DebitBureau database. Experian will use the DebitBureau database in offerings that include prescreen segmentation and suppression, emerging consumer identification and assessment, portfolio management, scoring and online reports. By allowing Experian to use eFunds' DebitBureau database, many consumers who were previously denied credit because of their limited credit information may now receive credit card offers. eFunds' DebitBureau database contains more than 3 billion records related to checking and savings account opening and closing information, checking account collections data, overdraft histories and check order histories. The database is growing at about 31 million records a month, receiving information from more than 77,000 retail locations, 90,000 financial institution locations and other sources.

STUDENT WALLETS

About 1.8 million students will be heading to college this month, carrying more plastic than ever. First USA released a poll that showed that 40% of college students will carry credit cards in their wallets. FUSA also found that parents will be making the card payments for slightly more than one out of three students. According to the First USA 'Financial Index', other items likely to be found in freshmen's wallets include: a telephone calling card (42%), receipts for purchases (37%), and organ donor cards (25%). The survey also showed that 8% of students list credit card among possessions necessary to succeed at school. To earn extra cash, 1.3 million of students will have a job during their freshman year.