Innovative POS technologies: can clubs benefit?

Although there is probably no club technology that has the potential for a higher return on investment than a point of sale (POS) system, some clubs have resisted POS implementation based on the fact the club collects little or no cash from operations. Recent developments in POS technology have produced systems that are more flexible and capable of fulfilling specific club needs beyond currency management. Instead of focusing on cash tendering, newer systems emphasize authentication, security, and electronic settlement options. Recent POS advancements such as dynamic signature technology, hybrid radio frequency identification (RFID) applications, and cellular phone transactions can provide clubs an unparalleled level of transactional processing while also providing a base for heightening access control and monitoring.

For example, a contactless RFID settlement system can be modified for club application to accelerate transactions, alert management when a member is on the premises, or provide an analysis of purchasing behavior. Similarly, there is little need to carry a club membership card when a cell phone can be used to accurately identify the member as well as send information to the phone's display. The possibilities of robust POS technologies being applied to member relationship management areas, not simply transactions, present an array of unique solutions that previously appeared infeasible.

POS Innovation

The movement from physical currency to cashless payments is becoming more prevalent as advancements in automated banking, account management, and methods of reconciliation gain in popularity. As the hospitality industry continues to adopt innovative transaction processing technology (TPT), it is important to recognize new payment formats can also be applied beyond settlement within the club environment. RFID tags have become more flexible, biometric characteristics more acceptable, and cellular phones more adaptable. In fact, within the club industry, innovations are leading to a transformation in definition of POS from point-of-sale to point-of-service; the focus club managers prefer. From a technology perspective, the future isn't what it used to be as RFID chips, hybrid cards, and mobile devices begin to impact payment processing in ways that can be modified into member-friendly applications.

RFID Technology

Contactless payment systems utilize embedded microchips and radio frequency identification (RFID) technology to effect transactions. With contactless payments, technically referred to as proximity payment technology (PPT), a cashless transaction is initiated and completed without physical contact between the payment media (card, tag, or fob) and a POS terminal (reader). Purchase transactions are conducted with a wave or tap of the media; not the swipe of a magnetic stripe. Settlement data is exchanged through contactless linkage with a specially designed radio frequency-equipped device. Based on field testing, the transmission and receipt of radio signals between a contactless card and reader enables an increase in transaction speed as well as enhanced consumer satisfaction.

While contactless payment technology is new to the club industry, it has been used in gasoline retailing (e.g. Mobil Speedpass) and toll road operations (e.g. EZ Pass) for nearly 10 years. Part of its success is attributable to the fact the data exchanged between the contactless media and the reader is not account information but an identifier that links to an authorized payment account. To club management, proximity payment systems can represent a competitive advantage gained through an alternate form of payment as well as serve to detect the presence of members on the property, in the dining room, or approaching the clubhouse. The RFID capability can be embedded in such non-traditional items as key-chain fobs, wrist watches, and cellular phones.

Radio frequency identification technology is used to automatically identify products, objects, pets, and people. RFID has many advantages over competing technologies in that it is a non-contact and non-line-of-sight technique and can be read at high speeds. RFID technology is quickly replacing the use of bar codes since such coding requires each individual product be handled carefully, positioned properly, and passed slowly before a scanner. To accurately conduct a bar code inventory requires each product be transported to a scanning device and processed one at a time. Since bar coding is read-only technology, it is not capable of transmitting data to/from the reader. The same is not true of RFID media which can communicate data directly to a reader without concern for sight line or scanning speed.

An RFID system consists of an integrated circuit (microchip) and an attached antenna embedded in media, and a transceiver (reader). RFID is available in two configurations: passive and active. Contactless payment systems use a passive design. In a passive system, the reader broadcasts signals that create an electromagnetic field thereby creating a sensitive detection zone. Once a passive RFID tag enters the detection area, its antenna is activated and it becomes engaged, receiving the signals of the reader. Basically, the microchip is empowered by the magnetic field and sends a signal to the reader acknowledging its presence. These signals are used to turn on the microchip's transmitter and thereby allow information exchange with the reader. A passive system is a short distance relay system (ranging from one inch to a few feet). In turn, the reader can then transmit the captured data to an external system for subsequent processing. In the case of a club installation, the RFID sequencing is the front-end of an accounts receivable transaction.

In an active system, the embedded microchip and RFID reader have onboard energy supplies and both are capable of sending and receiving signals to establish a long distance range of interaction. Active RFID microchips normally possess read and write functionality, thereby allowing the microchip's data to be modified or rewritten. The read range for active microchips spans from several inches to more than 100 feet. Given the nature of most club operations, a passive configuration is appropriate. RFID passive system components include:

Transactional Media--Transactional media can be used to carry the microchip and onboard antenna and is usually a plastic card, mini-card, flexible tag, keychain fob, printed label, or cell phone. The structural material must be strong and durable enough to support an embedded microchip and attached antenna.

Microchip--An encapsulated microchip is embedded into the transactional media and is externally energized to transmit encrypted settlement data through reader activation. The microchip is typically very small (e.g. size of a pen point) and practically indestructible. The microchip does not require a battery and has a workable life estimated at 10 years.

Antenna--A miniature antenna or simple loop wire is connected to the embedded microchip to detect the presence of an electromagnetic field and to transmit data. The antenna, like the transactional media, is built into the structural material of the media.

Reader--The reader generates an electromagnetic field through its antenna and once an RFID-equipped microchip enters the detection area, it becomes activated and capable of exchanging signals with the reader. The signal exchange initiates activity of the transmitter and thereby establishes authorization between the media and reader. The reader can then transmit the data to an external data processing system or file server for subsequent settlement.

Club Applications

There is one club currently employing RFID technology for transactional authorization and control access in a very unusual manner. The Baja Club of Barcelona, Spain injects an RFID chip into its member's left shoulder for identification and authorization purposes. The club uses a passive, encapsulated microchip, injected subcutaneously. The injected chip is energized to transmit settlement information through detection by a specialty reader. The implanted chip is small (pen point), is undetectable, and practically indestructible. The chip has a special polyethylene sheath that helps skin bond to it and thereby holds itself in place. Since the chip does not have a battery, there is minimal risk of chemical harm to the wearer. The subcutaneous chip has an expected life of 20 years and is available from VeriChip.

Biometric Technology

Most security systems rely primarily on passwords, personal identification numbers, or smart cards to ensure validation of an authorized user. There is, however, a common vulnerability associated with these non-biometric techniques: verification can be lost, stolen, duplicated, or guessed. Biometrics refers to the use of an automated system to verify personal identity through physical characteristics. Biometric technologies form the basis for highly secure identification and verification systems. With identity theft and fraudulent activity increasing, biometric-based solutions can provide increased security and confidentiality of personal and financial data. More secure than PIN numbers, passwords, social security numbers, and signatures, biometrics can authenticate an individual based on unique attributes that are difficult, if not impossible, to copy or forge. Although fingerprints are the most popular biometric characteristic used, other measurable traits include iris, facial, voice, hand geometry, and handwriting recognition.

Dynamic Signatures

Whenever a biometric technology is used, the basic concept of verification remains the same; a personal characteristic is measured and evaluated. Comparisons against stored mathematical algorithms or image patterns can be performed automatically using high-speed specialty software. The justification for confidence in a biometric system is that identity cannot be forged. Proponents have never had trouble explaining the benefits of fingerprinting since each person has a unique set, and validity can be established in the legal system as an authoritative means of proving identification. However, the uneasiness of registering fingerprints, normally associated with criminality, coupled with the thought that a print might link to proprietary personal information, contribute to fingerprinting being an unappealing technique for club members. It is for these reasons that dynamic signature analysis may have a higher likelihood of club member support.

Practitioners who have tried fingerprint and signature metrics claim it is much easier to capture a user's signature for quantification than fingerprints for calibration. Dynamic signature technology is a relatively recent phenomenon that works by evaluating the behavior associated with the act of writing one's name. The cadence and pattern of the characters in a signature, along with speed, pressure, and stroke order, are used to produce a mathematical representation of the signature. In other words, the signature image is not stored, only its mathematical value. As biometric technology has advanced, hardware and IT costs have dropped, providing an additional incentive for club consideration.

Signature Metrics--Unlike signature capture systems that compare a signature scribbled on a tablet to a stored signature image (static comparison), interactive metrics focus on the cadence and pattern (dynamic comparison) of the user's writing style to verify identity. Using biometric authentication measures to create a dynamic signature, the system is able to capture data based on the movement of a writing instrument (pen or stylus) over a flat surface (digitizer tablet) in the form of acoustic emissions. Acoustic emissions are generated from the sequence in the signing process and constitute a pattern unique to an individual's writing style. This pattern contains extensive information about the way in which the signature was executed.

In order to create an identity standard, signature analysis software prompts the user to enroll by signing his/her name three times in succession. Matches lead to formation of a wave graph that can be encrypted and compressed into a template. While it is possible for a skilled forger to produce a good visual copy or facsimile of a signature, it is nearly impossible to accurately reproduce the dynamics of a genuine signer. In addition, a signature metric system protects the privacy of its user since no personal information can be recreated from a stored template--only an acoustic emissions map. In essence, a signature metric application transforms a series of movements into a unique collection of biometric data (e.g. rhythm, acceleration, pressure, and flow) and may be appropriate for club application.

A leading provider of dynamic signature analysis is Cyber-Sign, which authenticates a member by focusing on the shape, speed, stroke order, off-tablet motion, pen pressure, and timing information captured during the act of signing. It is important to note that comparative analysis of a user signature to a recorded template occurs in fractions of a second and hence should not interfere with the level of quality service.

Hybrid Card

Hybrid cards, which combine the benefit of biometrics with a contactless RFID card, have started attracting attention in the marketplace. While an RFID card can function as a credit card, debit card, smart card, or prepaid card, up until recently there has been no easy way to verify that the cardholder is the authorized user. A hybrid RFID card, termed an RFID biocard, attaches an onboard fingerprint scanner to the RFID card to establish internal identification authorization. When the user's fingerprint matches the print stored on the biocard, the RFID chip is activated (energized) for signal transmission--but only for a predetermined, limited timeframe (e.g. 30 seconds). A biocard may be a convenient way for clubs to control authorized entry or member transaction settlement.

Biometric RFID Card--An innovative hybrid card features an embedded fingerprint scanner, microchip, and magnetic stripe built right into the body of a plastic card. In order to initiate a transaction, the cardholder swipes two fingers across the card's embedded scanner. Two fingers are required since requiring only one finger could make the card unusable if the principle finger was injured (e.g. cut, burned). The card is capable of storing images of six scans--three for each finger--in an embedded microchip. Once the image is acquired, it is locked into the fingerprint scanner and cannot be changed. The fact that images are stored on the card provides tight security and more rapid access than otherwise provided through verification and authorization interaction with a remote database.

Transaction scans that prove a match activate the on-board microchip to complete a transaction. A successful biometric match authorizes the card for a predetermined time; if a transaction is not completed in the allotted time, a fresh match must be performed. Unless activated, the card is just a piece of plastic. The appeal of a biocard is that it operates autonomously as the recognition of the fingerprint is performed on the card itself. Hence, no link to an external database is needed and the scanned fingerprint never leaves the card. In addition, the process operates without the need for a signature or PIN code and the card never leaves the cardholder's hand or sight during a transaction. The RFID biocard is expected to have a life of two years. A pioneering manufacturer of this card is a Danish company named Scanecotech AS.

The implementation of a fingerprint-secured, RFID contactless card is expected to be in circulation by mid2006. This hybrid card has been designed with an onboard fingerprint scanner, embedded biochip, and an RFID-enabled chip for controlling cashless transactions. Developers of this biometric payment card (biocard) claim it is compliant with ISO 14443 technical protocol and can be used wherever contactless payment technology is available.

Unlike other biometric payment technologies, the biocard features a self-enrollment process that provides the cardholder the opportunity to scan and store fingerprint images as digital certificates in an onboard memory chip (biochip). It is important to note that the biocard is self-contained and operates independent of an external database or system server. The cardholder scans either one or more fingers to capture their prints for direct image storage or conversion to a digital certificate. When a digital certificate is used, the fingerprint is stored as an encrypted version of the mathematical coordinates of the fingerprint template.

When the user's live fingerprint matches the stored print image or digital certificate, the card's radio frequency identification chip is activated, thereby enabling transaction processing. Given the uniqueness of fingerprints, on-card authentication provides the highest level of security and cardholder privacy. Since the cardholder's biometric data is maintained directly on the biocard, there is no need for new hardware or software at the point-of-sale. The biocard simply extends the front-end of the payment processing system.

NFC Technology

Near field communication (NFC) technology devices provide short-range wireless connectivity--from a 2-4 inch range--without the use of radio frequency (RF) transmission. Since NFC devices require their own power supply, cellular phones and PDAs are likely candidates to house this technology. Club uses include member identification management, access control, and payment systems. Soon members will be able to open files and door locks, and replace remote control devices with an NFC-enabled cell phone.

Technology experts anticipate proximity payments will soon be added to cell phones as they become equipped with near-field communication (NFC) technology. Instead of carrying credit cards, debit cards, loyalty cards, prepaid cards, hybrid cards, or other settlement media, the cell phone will be used to settle transactions. Transmitting payment information via cell phone to a POS terminal is sufficient cause for concern, but concern is compounded by the possibility of losing the phone. The solution may well be a biometrically controlled cell phone that requires the user's personal attributes to activate settlement.

NFC Applications

Designed to quickly link dissimilar electronic devices, NFC technology is capable of altering the functionality of cell phones and PDAs. NFC-enabled devices can be linked with contactless payment systems, online concierge services, website download content providers, and club member services. NFC-enabled applications, being developed and tested by Nokia, Motorola, Philips, and Sony, can be divided into four broad categories.

1. Touch and Go.

Applications that merely require that a device equipped with access information be brought into proximity of a reader. Examples: club event ticketing, security access coding, and smart label reading.

2. Touch and Confirm.

Applications such as mobile payments where the user has to confirm acceptance of a club transaction and/or enter a password to verify and authorize payment.

3. Touch and Connect.

The linking of two NFC-enabled devices for peer-to-peer data transfer. Music downloads, image exchanges, and address book contents, for example.

4. Touch and Explore.

NFC devices can offer multiple functionality. The user is able to explore device capabilities to select the most appropriate function or service.

Cell Phone

Cell phone manufacturers are experimenting with several new formats including hardware modification (shell casement and fingerprint authentication) and software add-ons (custom shortcuts and voice authentication). Although in its infancy, innovative cell phone POS technology is expected to become the next generation solution as young consumers, already cell phone dependent, dominate the marketplace. A real fear associated with cell phone settlement is the threat of misplacing or losing the handset. Phone absence could also mean loss of transaction functionality. Security concerns point to a need for better authentication methodologies, including fingerprint authentication and voice authentication, so that lost equipment is rendered unusable.

Shell Casements--Handset transaction processing can be accomplished through placement of an outer casement with an embedded chip over the phone. The outer shell uses near field communications (NFC) technology that allows for contactless payment by pointing the phone at a specially modified POS terminal. NFC technology evolved from a combination of contactless identification (RFID) and interconnection technologies. Payment information, such as debit or credit card detail, stored in an integrated chip in the shell, complete the transaction. An example of an enabled phone is the Nokia NFC shell for Nokia 3220 phone. The shell allows the user to conduct transactions simply by touching a qualified POS device. The user's payment credentials, such as debit and credit card account data are securely stored in the integrated smart card chip of the shell and exchanged during the transaction. The shell is compliant and interoperable with standard contactless smart card applications.

Fingerprint Authentication--An innovative cell phone with a fingerprint chip at its base requires the user swipe a finger across its surface before the phone is operable. NTT DoCoMo Inc. has developed such a phone that is being marketed in Japan for use as an electronic wallet and to activate withdrawals from cash machines. The DoCoMo F505i and F901iC feature fingerprint scanning panels to prevent unauthorized handset use.

The user can lock or unlock the cell phone simply by placing a pre-registered finger on the sensor. Up to 10 fingerprints can be registered for authentication on a single phone. Once activated the phone can be used to conduct transactions and exchange proprietary information.

Voice Authentication--Cell phone voice authentication is keyed to recognizing characteristics of the user's voice and thereby activating the device. Although considered a low-to-medium-level identification technique, little modification is required as the necessary hardware is already in place and improved software is evolving. This approach allows speaker-verification based on stored data burned onto an existing microprocessor within the cell phone. A factor hindering application, however, is the questionable quality of cell phone microphones that have not been proved capable of supporting voice recognition nor reliable enough to sort out voice input within a noisy or busy environment.

A provider of voice authentication software is Voice Security Systems. Its approach involves obtaining a voice template of the user captured through the microphone of the phone. The company cites its approach as low-cost since the recordation of a voice template does not require extensive software or ongoing maintenance to keep it operational.

Summary

As contactless payment technology options continue to emerge, innovations in RFID processing, biometric mapping, and cell phone settlement may change the way clubs chart, monitor, and track member relationship management. As passive RFID applications, dynamic signature cadence, and mobile devices are implemented, several unintended applications can be gained. As clubs renew their interest in POS systems, it is imperative that system capabilities be known and matched to management needs.

MICHAEL L. KASAVANA, PH.D., NCE, CHTP NAMA PROFESSOR IN HOSPITALITY BUSINESS THE SCHOOL OF HOSPITALITY BUSINESS, MICHIGAN STATE UNIVERSITY