The merger ends a patent battle between the two firms. In February this year San Francisco-based Pay By Touch filed suit against BioPay alleging infringement of two patents it secured for its biometric authentication technology. Virginia-based BioPay had previously also filed a separate patent infringement lawsuit against Pay By Touch.

Under the terms of the merger agreement, San Francisco-based Pay By Touch says it will acquire all assets of BioPay, including its patent portfolio, and assume responsibility for its two million enrolled members. The BioPay system is used by about 1600 small and midsized retailers across the US.

Pay By Touch says the deal will combine BioPay's fingerprint-scanning system, which is used to authenticate customers seeking to cash cheques, with its own technology which uses fingerprints to verify consumers at the point of sale, allowing them to pay for purchases without cards.

"Pay By Touch and BioPay complement each other because we have been successful in different areas of the marketplace," says John Rogers, founder, chairman, and CEO of Pay By Touch. "BioPay has perfected an excellent cheque cashing solution, and Pay By Touch is making incredible inroads in in-lane payments. We are hand in glove, and together we can provide solutions for retailers and consumers alike."

Pay By Touch says it expects to complete the deal within the next few weeks. BioPay is the latest is a string of acquisitions made by Pay By Touch in recent months. Last week the vendor said it was acquiring Capture Resource, a provider of loyalty-program management systems to merchants, while in October it out-bid CyberSource to acquire the assets of CardSystems, the Atlanta-based card payments processor which was involved a massive security breach earlier this year.