Embedded Chips Lend a Hand To Unattended Retail

One of the latest unattended retail innovations is hardly a chip off the old block. In fact, it’s a chip that promises to significantly change the block into something seemingly out of a science fiction story.

Three Square Market, a Wisconsin-based technology company providing micro markets for businesses, recently made waves with its controversial, in-house program: a beta test that has some company employees voluntarily fitted with tiny microchips in their hands. Once implanted, employees can use the chips to purchase food and beverages in the company’s break room, unlock secured doors and access computers, simply by waving their chipped hands.

In early August, the company hosted a “chip party” for approximately 50 employees — about half of the Three Square Market staff based at company’s River Falls, Wisconsin headquarters — who agreed to have the tiny, grain-of-rice-sized chips embedded in their hands. Several employees were eager to participate, based on statements provided by Three Square. Participating employees said they wanted to be among the first to experience the technology and test the new product before it reaches the broader consumer market.

Naturally, the idea of being fitted with a microchip can sound a bit like a storyline out of a dystopian science fiction story, and it’s understandable that some employees did not opt into the program at first opportunity. Realizing that implanting microchips in employees — even on a voluntary basis — would generate controversy, and in the interest of transparency, Three Square also released statements from non-participating employees. Employees who took a pass on the implanted chips cited reasons ranging from unknown impacts to personal discomfort with the process.

Patrick McMullan, Three Square Market’s president and COO — who also happens to be one of the initial participants in the implanted chip program — spoke with PYMNTS a few days before the implantation process and again a few days after. McMullan discussed why he and other company employees wanted to participate in such a controversial program, and the future applications he envisions for the technology — including cashless payments.

Chips on the table

McMullan had his chip implanted between his thumb and forefinger, with the help of a trained tattoo artist, in a process that was shown live on the Aug. 1 broadcast of NBC’s “Today” show. He said the process felt like getting an ordinary immunization and took about 90 seconds to complete. While the chip needs a specialist to implant it correctly, McMullan added that if an employee wanted to remove it for any reason, extrication as simple as removing a splinter.

The chip uses both radio frequency identification (RFID) technology and near field communication (NFC) which allow employees to make purchases in the company break room, open locked doors, operate photocopy machines or access computers without typing in usernames or passwords. Users simply wave their chipped-hands in front of a chip reader to accomplish these tasks, just like displaying a smartphone to make a purchase using a mobile wallet or app.

Since receiving the implant, McMullan says he has been using the chip to perform these tasks at the company headquarters. He said he and the other program participants will be conducting these types of activities on a regular basis as part of the beta test to determine the chip’s range of capabilities.

McMullan emphasized that participation in the program was completely voluntary. Despite the controversy, he said, many employees were eager to sign on.

“The majority of employees in our headquarters are running full-speed into doing this,” McMullan said.

Comparing the chip technology to the rise of smartphones and smart watches, McMullan said most company employees jumped at the chance to help the company forge ahead and gain an understanding of the chip’s capabilities.

“[Participating employees] are very enthusiastic about it because they’re on the leading edge of something that is new,” he said. “When you’re a technology company, you’re enthusiastic about being innovative. They’re looking forward to [discovering] what it can do and helping us develop other applications.”

The ‘Big Brother’ question

Naturally, the idea of being fitted with microchip technology raises privacy concerns for many people, conjuring images of “Big Brother” monitoring a user’s movements and activities.

But McMullan emphasized the chips are not fitted with GPS technology and cannot be used to trace an employees’ whereabouts. Those who are concerned about privacy and being traced should be more concerned about the technology in their smartphones, he said, adding that Facebook users can locate one another through the platform’s geolocation features.

“You have more tracking information on your cell phone than you can possibly imagine,” McMullan said. “People that are concerned about [being tracked] need to throw their phones away.”

However, he also noted the chip could be fitted with GPS “at some point” in the future, should the company decide to go that route with the technology.

From the big house to the break room

Three Square Market’s chip technology has an unusual origin story that begins, oddly enough, behind bars.

McMullan is also the COO of TurnKey Corrections, a company providing technological solutions for correctional facilities. TurnKey offers a variety of solutions specifically aimed at serving inmates in correctional facilitates, including the payment processing of inmate funds, inventory management for commissary supplies and mobile applications to help inmates receive money from family and friends.

Eventually, TurnKey started to look for ways to bring its solutions outside of the prison system. It began providing offerings for the multimillion dollar micro market industry — including break rooms — through its sister company, Three Square Market.

“We knew there were uses for this system and those functions outside the correctional market,” McMullan said.

The company eventually went global and expanded its reach into Asia, Australia and Europe. It was after expanding into Sweden that the company partnered with chip manufacturer Biohax International to develop the implantable chip for its employees. Implanted chips have previously been implemented in Sweden, with an estimated 2,000 people having had the chip implanted. The technology has been used to pay for public transportation and other applications.

Future applications?

With Three Square Market running beta testing for its implanted chips on itself, McMullan said he sees several new opportunities for the technology beyond beta. If the implanted chip technology becomes more widely accepted, he believes it could replace longstanding physical items such as medical records or free consumers from carrying physical payment options like credit or debit cards and cash.

“In all reality, this makes us take another step toward a completely cashless environment,” McMullan said.

Looking to Sweden’s example, he sees the potential for the chip technology to be applied to several transportation solutions, such as paying for public transportation or rideshare services.  Identification is another physical item that McMullan believes could become physically obsolete someday. He noted one major airline provider, Delta, which is allowing passengers leaving from Reagan Washington National Airport in Washington, D.C., to board planes using their fingerprints as ID. Implanted chips could be the next logical enhancement to biometric technology because they allow for the storing of additional identification information.

The idea of digitizing IDs or going completely cashless might be a long way off, but McMullan said Three Square Market intends to be a player in the space as the vision becomes closer to reality.

“We want to be a leader, not [a company] that jumps on three years later,” McMullan said. “We want to be [a company] that’s an innovator and brings [the technology] to society, and introduces it so it’s being done for the right reasons and the right purposes.”

But despite those assurances, some Three Square Market employees shared their reasons for opting out of the program, at least in its early stage. In statements provided by Three Square Market, one employee said he or she “would like to see how, exactly, this chip will work with those who have received it,” while another said he or she felt “unsure as to the limited testing it has undergone.” Another employee noted, “There are still too many unknowns, and the technology is so new, that I would rather wait for round two or three or four to make sure all the kinks are worked out.”

So far, McMullan said, the chip implantation has gone “flawlessly” and the company has already been approached by more than 130 companies and governments requesting to work with Three Square for their own purposes. McMullan said all these requests have been to test the chips in “non-invasive” use cases.

But, McMullan said, while Three Square is excited about getting other companies on board, it has no intention to rush the release of the chip technology.

“This is going to be done right, not fast,” McMullan said. “We went to the extreme of having it implanted [in ourselves] because we wanted to understand what it can possibly mean.”

In other words, both those who are interested in participating in the next implanted chip program and those who are unnerved by it must wait to see how it unfolds — chip in hands.

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The PYMNTS.com Unattended Retail Tracker serves as a bimonthly framework for the space, providing coverage of the most recent news and trends, as well as a provider directory to highlight the key players contributing across the segments that comprise the expansive unattended retail ecosystem.