While the concept strikes critics as Orwellian, others believe that, as we stride ever-closer towards a cashless society, it is only a matter of time before the chip becomes a method of fraud-proof common currency.

Brad Stevens, owner of Bar Soba, said his motivation for introducing the technology was to be cutting-edge and to reward loyal customers. He said he had received a surprisingly enthusiastic response from regulars.

'There are a number of advantages from instant access to one of our many exclusive DJ and VIP nights and not having to carry money or credit cards to letting bar staff know a customer's name and favourite drink. By the time you walk through the door to the bar, your favourite drink is waiting for you and the bar staff can greet you by name.'

However, he also recognised the risks. 'There is a danger that, if a person's not carrying cash, they could just keep on drinking. But we're looking at ways of setting a limit on how much can be spent.'

The VeriChip is the size of a grain of rice, does not set off airport scanners and contains no power supply. It is encased inside a glass and silicone cylinder and implanted by a medical professional, under local anaesthetic, between the layer of fat and skin on the upper arm.

The chip, which has a life span of about 20 years, lies dormant until a scanner is passed over it, sending out a low-range radio frequency. It responds to the signal and supplies the scanner with its unique ID number. How that number is used depends on the database the scanner is hooked up to. In the case of Soba, it will be the balance on a person's bar account.

Steve van Soest is one of more than 100 people who have been 'chipped' at Baja Beach Club in Barcelona since it became the first to offer the procedure in March.

'The main benefit is that you can go out without having to carry a wallet, which can get easily lost in a nightclub,' he said.

He said he had no reservations about having the chip implanted, adding that he can only feel it when he stretches his arm.

'It would be great if this catches on and you could put all your personal details and medical records on it. If I was involved in an accident, doctors could simply scan me and find out my blood group and any allergies.'

The chip is similar to more than 25 million already embedded in animals across the world acting as 'pet passports'. Before being used in humans, it has undergone stringent tests and doctors say it is extremely safe.

But critics regard this technology as a growing threat, giving potentially dangerous new power to businesses and government. A recent report by the American Civil Liberties Union said: 'Scarcely a month goes by in which we don't read about some new high-tech way to invade people's privacy, from face recognition to implantable microchips, DNA chips, and even brain wave fingerprinting.'

Sunday January 16, 2005
The Observer