Amazon announced a new payment technology on Tuesday, which uses the palm of your hand instead of plastic or cash. While the Amazon One palm scanners have some traction—the company says it’s actively discussing expanding the technology with several potential customers—privacy concerns may be a roadblock to widespread adoption.
- Amazon One is a new form of contactless payment technology that scans your palm to identify you.
- The e-commerce giant plans to test its Amazon One palm scanners at two of its physical stores in Seattle.
- Some details remain unclear, but privacy concerns could be a major obstacle to widespread adoption.
How the Amazon One Technology Works
Biometric authentication has been around for years. Most consumers are familiar with the facial or fingerprint recognition technology they can use to unlock their phones.
Amazon One’s payment technology uses proprietary algorithms to scan the unique features below the surface of a user’s palm, including vein patterns.
Unlike a fingerprint scanner, however, users won’t have to press their palm down on the reader, making it a truly contactless payment method.
You won’t need a regular Amazon.com account to sign up for Amazon One—the company says you’ll just need a palm and a phone number. (Plus, of course, a credit card account on file with Amazon.) When you scan your palm, Amazon will match it to your credit card and process the payment.
Amazon plans to test the technology at two of its Amazon Go stores in Seattle, where customers can shop and pay without a checkout process.
How Amazon One Could Impact the Credit Card Industry
The credit card industry has made significant strides in payment security, including the introduction of EMV chips and contactless payments. While the mechanics of the two are different, they both use the same underlying technology, which relies on unique tokens to mask the consumer's card information and prevent hackers from reusing it.
According to Amazon, the image of your palm will be encrypted and stored securely in the cloud. It’s unclear how Amazon processes the payment with the retailer once the palm signature is confirmed. But leaving a physical credit card or even a mobile device out of the picture adds an extra layer of security that could reduce credit card fraud—and save credit card companies a nice chunk of change.
It’s also assumed that Amazon One payments will be considered card-present transactions, similar to ones made with digital wallets like Apple Pay and Google Pay. This means that credit card companies will continue to receive merchant fee revenues.
In the long run, Amazon One technology could theoretically be a win for the credit card industry because it shifts the burden of security slightly, and card issuers will continue to earn fees on transactions. But based on privacy concerns and what we know about digital wallet usage, it’s unlikely to have much of an impact.
Why It May Not Get Much Traction With Consumers
While Amazon’s palm scanning technology might be a boon to credit card issuers, it could face obstacles in achieving widespread acceptance among consumers, similar to the experience of digital wallets.
For example, Apple Pay launched in 2014, and Google and Samsung came out with competitors the following year. But according to Expert Market, only 3% of all U.S. retail sales were completed using a mobile device in 2018. The B2B marketplace anticipates mobile wallet spending to grow a little more than double from 2018 to 2022, but that still doesn’t move the needle by much.
Privacy concerns are another major roadblock to widespread adoption, and Amazon hasn’t had a great track record with data privacy. The company has been criticized for selling facial recognition software to law enforcement agencies in the U.S.—though it recently put a one-year moratorium on direct sales to give legislators time to create regulations covering its use.
Also, one of its subsidiaries, Ring, which manufactures home security products, has been the target of civil rights complaints over its partnership with police departments across the country.
Finally, while Amazon claims users can delete their Amazon One data from the website, the company has confirmed that it retains some transcripts of voice interactions with its Alexa devices even after customers delete the audio.
Amazon One may well move past its trial phase and establish itself as an alternative form of payment. But it seems unlikely to become a major force, at least not for some time.
Expert Market. "Mapping Mobile Wallet Payments Around the World." Accessed Oct. 3, 2020.
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