Amazon's palm-reading payment system is the sort of product that could probably succeed only at this point in time.
Called Amazon One, the service uses contactless palm scanners to authenticate people for shopping at two of its checkout-free Amazon Go stores in Seattle. These stores had already seen some backlash because their invisible, digital payment systems largely exclude people who prefer cash; and the idea of adding biometrics on top of that may have been seen as a step too far.
But this late into 2020, people have become accustomed to digital payments as an alternative to handling cash or touching a PIN pad. Amazon's system requires consumers to dip a card to enroll, and every trip thereafter becomes touchless. Instead of scanning a QR code from an app, as Amazon Go stores do today, the new system uses a palm scanner to identify shoppers and control access to stores.
Consumers do not need an Amazon account to use Amazon One, but using an Amazon account with Amazon One allows consumers to view usage history on Amazon’s website.
Amazon is also interested in using One as a digital ID tool, and is seeking business from offices, buildings, sports facilities, gyms and other facilities with digital gates.
The service places Amazon in the race to improve
Amazon is relying more on its own hardware to upgrade authentication, an expense that Amazon can likely absorb given its size. Because Amazon controls the enrollment at its stores, the retailer would be in the best position to benefit from the downstream shopping and transaction data that follows.
Amazon did not make an executive available for comment, but in its announcement mentioned Amazon One could become an alternative payment or loyalty card option with a contactless palm Amazon One device sitting next to a traditional point of sale terminal. Amazon contends palm recognition is more private than facial biometrics, and requires an intentional gesture of holding a palm over a device. It’s also contactless, which Amazon said consumers would “appreciate” in the current environment.
Using hands as a payment device has failed in the past.
“The key value proposition [for PayByTouch] from a merchant’s perspective was to enroll the customer’s checking account at the same time, and by transitioning card-based payment acceptance over to ACH, the merchant could theoretically significantly reduce the cost of acceptance,” said Julie Conroy, a research director at Aite, adding changing consumer behavior proved to be difficult. “What Amazon has going for them this time around is the pandemic as a catalyst for change, not to mention their substantial brand and marketing engine.”
Gaining support from other merchants may be a challenge, given the expense of autonomous checkout and Amazon's status as a competitor in many retail categories. There are dozens of checkout-free technology companies chasing merchants, often using Amazon's competitive threat as part of the sales pitch.
"But for Amazon [the expense] is just part of their research and development spend philosophy that you have to fail before you can succeed, which means trying various systems within their retail ecosystem," said Raymond Pucci, director of the merchant services practice at Mercator. "So I don't see palm recognition catching on with mainstream merchants, but there's wider opportunity for this authentication method for airports, office buildings, schools and other facilities."
Even without third parties, Amazon has a considerable addressable market. Amazon is expanding its brick and mortar strategy, through the checkout-free Amazon Go, Whole Foods and its own planned supermarket chain that’s distinct from Whole Foods.
Amazon is using a range of technologies to reduce lines and speed checkout, putting checkout-free sensors in its Go stores and shopping carts, and is seeking vacant shopping mall anchor stores for Amazon Go locations. It's a similar strategy to its core e-commerce business, which has tried a menu of drones, autonomous vehicles, smart doorbells and in-home ordering buttons to gain a greater share of shopping that might otherwise be done in person.
The company's in-store strategy likely requires the same diverse range of approaches, since palm payments are not likely to be ubiquitous. Amazon additionally risks losing some of the security benefit by making the readers contactless, according to Tim Sloane, vice president of innovation at Mercator.
“Some palm readers are very secure, they recognize active blood veins for liveness and collect a wide range of palm-specific data, but these all require that you place your palm on a sensor,” Sloane said, adding there are other limitations around mobile shopping and payment — two other trends that have accelerated during the pandemic.
Amazon One "is great for shopping in-store but won’t help identify the person in a car that bought online and is picking up in the parking lot,” Sloane said. “That still needs the mobile app.”
