Saturday , October 24, 2020

Amazon’s Venture in Pay-by-Palm Holds Promise But Faces Some Difficult Obstacles

Amazon.com Inc.’s ambitions now include devices that could authenticate payments by scanning the palm of the customer’s hand. But while this latest twist in the e-commerce giant’s payments strategy could result in faster and more convenient transactions for users, it also could run into roadblocks that have scuttled similar ventures in the recent past.

Nor is the technology likely to emerge any time soon. Experts caution a device that can reliably read and process a palm print and keep both transactions and biometric data secure is likely to undergo lengthy lab and real-world testing. “It’s an interesting idea, but it’s a long time to prime time,” notes Thad Peterson, a senior analyst at Aite Group, a Boston-based consultancy.

The e-commerce giant has enlisted Visa Inc. to run tests on the terminals, which would allow consumers to link their palm print to a payment card, and is talking to Mastercard Inc. along similar lines, according to a report over the weekend in The Wall Street Journal. Citing sources “familiar with the matter,” the Journal story also says JPMorgan Chase & Co., Synchrony Financial, and Wells Fargo & Co. have indicated interest in the project.

Contacted by Digital Transactions News, Amazon refused to comment on the matter, as did Chase, Synchrony, and Wells. Mastercard and Visa did not respond to a request for comment.

If this latest project becomes a reality, it will represent Amazon’s latest thrust in the payments business. It already offers a quick-click payments service called Amazon Pay for other e-commerce sellers and has made moves to take the service to physical-world merchants. 

It also has launched convenience stores that allow customers to pick products and walk out. These Amazon Go stores rely on sophisticated camera systems and sensors to keep tabs on products consumers put in their baskets. They also depend on Amazon’s expertise in linking transactions to stored card credentials, experience that will likely prove crucial in the pay-by-palm venture.

Amazon owns the 400-unit-plus Whole Foods grocery chain, which could also play a critical role in trying out the new technology, observers say. “They have a testbed already in Whole Foods,” says Peterson.

But the history of biometric payment authentication at the point of sale is mixed at best. The closest analog to Amazon’s palm-scan venture could well be a service called Pay By Touch, which linked card credentials to users’ fingerprints and enjoyed some early success in recruiting chains to deploy its devices. By early 2008, the venture had about 600 stores using its point-of-sale system. But Solidus Networks Inc., the company behind Pay By Touch, went bankrupt, and in March that year it abruptly shut down its network.

“The last attempt at biometrics in stores was Pay By Touch, and that didn’t work out very well,” recalls Peterson.

To be sure, Solidus Networks faced challenges that were largely unrelated to its technology, including alleged mismanagement and financial headaches resulting from a buying spree that included acquisitions of transaction processors and another biometric-payment firm.

Amazon is not likely to suffer from such missteps. But it will face resistance from both stores and consumers, Peterson predicts. And a number of questions about the palm-scan venture remain to be answered, such as whether it will be possible to link more than one card to the palm print.

“There are going to be people who don’t trust biometrics,” Peterson says. Nor are conventional mobile wallets, which themselves are still working to win merchant and consumer adoption, at risk of losing any immediate share of the POS business to Amazon’s latest venture, Peterson argues. “I don’t see them having a significant impact on mobile wallets, at least in the short term,” he says.

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