Amazon envisions the next level in biometric payments: Waving with your hand

Last week, Amazon made plans to introduce terminals that will allow consumers to make payments by waving the palms of their hands. These terminals would be placed in brick in brick and mortar shops and would be enabled to link consumers’ credit card information to their hands.

Rather than having to pay with their wallet, or use their mobile phones, customers at brick and mortar locations would pay for their goods using their hands. According to the Wall Street Journal, Amazon plans to pitch this new payment method to high volume repeat purchase businesses such as fast food restaurants and coffee shops. Like Amazon’s competitors, Apple and Google, large tech firms are trying to embed themselves into consumers’ financial lives. For example, on top of mobile payment systems, Google is promoting their new checking accounts for consumers, and Apple released a credit card last year.  In addition to Amazon Pay – Amazon’s digital wallet, the tech firm has been experimenting with different ways to leapfrog mobile payments all together. At its Amazon Go stores they have tried customers being able to leave stores with their products without having to stop and pay for them.Amazon has already begun discussions with credit card issuers. JP Morgan Chase, Wells Fargo, and Synchrony Financial are showing interest with enabling their consumer’s card accounts to work with Amazon’s new terminals.  Here’s how amazon expects it to work:

• Customers would first link their credit or debit card information to the Amazon terminals. The speculation is that they would first insert their cards then scan their hands.
• When it comes time to make a purchase, consumers would need to position their hand in front of the scanner at the payment terminal.

The description of the patent application that has been filed is described by WSJ as “non-contact biometric identification system” including “a hand scanner that generates images of a user’s palm”.

Once a consumer completes uploading their information and their purchase, data would pass through the terminal from the merchant to Amazon’s cloud. The advantage for Amazon here is they are hoping to take the merchant/consumers’ information and leverage it against advertisers on Amazon.com. They would do this by charging advertisers higher ad prices based on the concept that they can predict when a consumer is more likely to make a purchase. According to a few sources, Amazon has already begun testing this payment system at select Whole Foods. Like all new tech, there’s always some risk and challenges other than consumer adoption.

In the past, Amazon faced roadblocks getting merchants to accept their Amazon Pay wallet as merchants did not want their customers to be reminded of another retailer when they made purchases. This could be a challenge for the non-contact biometric terminals used outside of Amazon owned stores.

Card issuers and payment also worry that eventually Amazon may cut them out of the picture in the future. In addition, fraud is a main concern as people may try to link their hands to stolen cards. Amazon will have to figure out how to navigate both consumers and card issuer’s concerns of how the terminals will detect fraud as credit card and personal information hacking have been on the rise in the last decade. Amazon allegedly has a plan to blacklist those who use the system fraudulently.

Finally, issuers are also questioning how Amazon will let consumers add multiple cards to their palms to have the option to choose which card they would like to pay with.