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The days of buddy punching time cards may be numbered for sneaky employees trying to work the system. Advances in technology and lower prices have allowed more quick-service operators to adopt biometrics as part of their loss prevention plans.
Although these fingerprint readers have been in existence for more than 10 years, there has been a "major uptick and widespread adoption" within the past 12 months, according to Gary Oberman, business development manager, OEM and development sales at DigitalPersona, a provider of the technology.
For example, his company recently deployed its U.are.U Fingerprint Readers to Sailormen Inc., the largest Popeyes Louisiana Kitchen franchisee in the U.S.; Rage Inc., which operates 118 Pizza Huts throughout the East Coast; and Tar Heel Capital, which owns 76 Wendy's locations in North and South Carolina. Oberman said there are three more "big names" ready to launch in the next few months.
Numerous reasons for growth
Biometrics technology, which uniquely recognizes humans based on intrinsic physical traits such as a fingerprint, handprint or eye iris, has been around since the 1990s. Reasons for the recent increase in adoption vary depending on who you ask. Oberman says there is simply more visibility and knowledge about the concept.
D. B. "Libby" Libhart, a loss prevention consultant and owner of LossBusters, said it's because technology costs are coming down, resulting in a "tremendous ROI."
Kevin O'Brien, senior account executive with LP Innovations, a loss prevention services company, said there is an increased need to safeguard a business and curb fraud.
All agree the devices are worth the investment. (Click here to see DigitalPersona's fingerprint reader system).
Benefits: Accountability, loss prevention
Research from the American Payroll Association shows that time theft can costs business up to 5 percent of gross payroll. Fingerprint biometrics combats attendance fraud, unauthorized voids and overrides.
Without this technology, restaurant managers swipe cards to authorize overrides and voids, and employees "punch in" using a pass code. By using the biometric readers for time and attendance, employees can no longer punch in for one another, reducing payroll fraud.
In addition, with fingerprint biometrics, employees cannot "borrow" a manager's card for transaction authorizations, which increases the assurance that a manager has followed the proper business and loss-prevention processes.
"Time theft is death by a thousand paper cuts. The biometric technology assures accountability," Libhart said. "This is a loss prevention revolution."
Other benefits, he said, include:
O'Brien added that PIN numbers or cards are regularly forgotten or lost, which incurs an expense and creates productivity interruptions.
Also, the system is PCI compliant and provides automatic audits.
"If you're using a swipe card, you have to change the password every 30 days to be PCI compliant. We have 75 stores with multiple managers at each store and multiple cashiers at each store," Ireland said. "Think about how much time and effort we save by not having to do that anymore because biometrics negates the need to."
Still, according to Oberman, the biggest benefit goes even deeper than saving time and money.
"First and foremost, this acts as a deterrent. It gives operators peace of mind and lets their employees know they're serious about holding people accountable when they have access to the cash drawer," he said. "If someone's drawer comes up short and only one person accessed it via fingerprint, there is no deniability there. It changes the entire atmosphere and forces people to do their jobs. It's very powerful."
Realizing a quick ROI
Operators who have deployed the fingerprint readers have realized a quick ROI. Tar Heel Capital used swipe cards prior to installing fingerprint readers. The cards led to significant abuses in fictitious voids, overrides and time clock fraud, according to Rob Ireland, director of IT. The company switched over almost three years ago.
"By deploying DigitalPersonal fingerprint readers, we substantially reduced theft at each location and saw an immediate drop in food costs as a percentage of overall sales," he said. "If this were super expensive, I could see the apprehension to adopt it, but it is not and we had an ROI easily in less than six months."
Sailormen's "significant and immediate" ROI came within the first 30 days of deployment of the devices.
The return typically happens fast because fingerprint readers cost less than $100. The software development kit is "virtually a no-cost item," according to Oberman, and there is no licensing fee required. "We get our revenue just from the sale of biometric readers," he said.
Is this system too good to be true?
Oberman admits the idea of having an affordable solution that eliminates fraud and increases employee accountability sounds too good to be true and says there are plenty of cynics. Among the misconceptions are high cost, invasion of privacy potential and employee anxiety.
Once operators realize the tangible ROI, cost shouldn't be a roadblock, said O'Brien, adding "Biometric technology is very affordable since its applications have become much more mainstream and more POS businesses are taking advantage of unique biometric technology characteristics that set them apart."
The readers can be integrated into a variety of POS systems and are connected via a USB port. Newer POS systems don't require a separate device; the readers are built in. Oberman said by the end of third quarter 2012, fingerprint readers will be built into all new POS terminals, and operators will have a choice between using biometrics, swipe cards or ID numbers.
As for privacy concerns, Oberman says DigitalPersona's biometrics technology does not store or pass along images of actual fingerprints, but rather captures an encrypted fingerprint template. It is important for employees to know their actual fingerprints are not being captured.
Ireland said he has never had a problem with employee apprehension. In fact, quite the opposite. "They all thought it was pretty cool," he said.
"The biggest stumbling block we find is discomfort because people still don't understand the technology and aren't comfortable with it," Oberman said. "As more businesses start testing and adopting the technology, they'll realize it's a no-brainer."
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