The "Touch ID" fingerprint scanner on Apple's new iPhone 5S isn't just a security device — it's also potentially the key that could unlock the long-promised (but little delivered) mobile payments revolution.
The company said yesterday that the fingerprint scanner will allow you to unlock your phone without using a password — the phone will know it's "you" from your fingerprints. With your real identity established, you'll be able to pay for stuff from iTunes and the App Store, too.
But marketers and retailers have broader plans for Touch ID: Making consumers feel secure about using their phones to make all sorts of payments.
The problem with mobile e-commerce is that consumers don't trust it. Everyone hates losing their phone; losing your mobile wallet and credit cards as well just makes it seem worse. Google has made a big play to get phone payments going with Google Wallet, but its adoption isn't close to being universal.
Apple's Touch ID potentially solves all that. Even if you lost your phone, no one else could use it to make payments because the fingerprint scanner won't let them.
David Marcus, president of PayPal, just told USA Today:
Within the next two years the vast majority of high-end smartphones will have biometrics and mainly fingerprint logins. It's going to be very useful for payments.
It's worth noting that Samsung has a fingerprint ID technology planned, too.
And Touch ID isn't merely about making iTunes downloads easier. It's about making payments faster, so fast they don't even require taps or clicks. Peter Nixey, an entrepreneur who has developed ID technology such as Clickpass, says:
It took me a moment to realise it but the fingerprint sensor is almost certainly not about securing your device. The fingerprint sensor is about securing your account. The fingerprint sensor is about payments, initially to Apple and then maybe subsequently elsewhere. The fingerprint sensor may be Apple’s mobile answer to Amazon’s web-bound One-Click.
... Amazon once measured a discernible difference in checkout rates from page loading increases of only 1/100th of a second. Apple has to request a password. That password has to secure the phone against chargebacks due to theft, purchases made by small children or just a trouble-making friend pinching your phone and playing with it. The only answer to those chargebacks today is to demand users to continually re-enter their passwords.
Nixey points out that Apple actually loses a lot of money because many people forget their App Store passwords.
While iTunes and the App Store get Touch ID-based payments immediately, everyone else — including PayPal et al. — are expected to get access to it in due course.
Touch ID also solves a problem that vexed the late Apple founder Steve Jobs:
"The swipe and PIN was one of the things Steve Jobs hated. It was in the way of the user experience," says Sebastien Taveau, chief technology officer of Validity Sensors.
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