Amazon's 'pay by hand' is as much about consumer intel as fast checkout

Amazon is reportedly testing technology that allows contactless payments via a hand gesture, applying technology that would provide valuable insight to fuel other initiatives such as Amazon Go.

The hand payment system is called "Orville" and uses computer vision technology to identify the shape of the consumer's hand, then charge the payment card the user has on file through Amazon Prime.

Amazon is testing the technology with employees in New York in advance of a deployment at its Whole Foods supermarket chain in early 2020.

Mike Kane/Bloomberg

Amazon did not discuss the tests, saying it does not comment on "speculation and rumors." Several technology blogs and the New York Post reported the pilot, adding Amazon is updating the technology to improve accuracy from one ten thousandth of 1% to one millionth of 1% before deployment.

The hand payment tests immediately draw comparison to Amazon Go, a checkout-free system that also relies on visual technology—cameras recognize items for purchase, then charge the consumers' Amazon account via an app, removing the need to check out. The difference between Amazon Go and Orville is Orville does not require a smartphone, instead relying on a stored biometric credential that's tied to the consumer's payment card and "hand on file."

Both Amazon Go and Orville are attempts to bust checkout lines, particularly at supermarkets, by making the payment more automatic, similar to a ride-sharing experience or an EZPass toll lane.

"For supermarkets, the actual payment is a relatively small proportion of time at the overall checkout, which is why you see many retailers experimenting with ways to reduce/ eliminate the need to ring up various items at the till," said Zil Bareisis, a senior analyst at Celent.

But in both cases, these enrolled credentials can be matched with shopping and payments data gleaned from advanced in-store technology and machine learning to inform more granular marketing, security and customer service.

"Orville" gives Amazon an added feature to scale its advanced retail technology strategies, potentially enabling it to cover a larger store network like the Whole Foods chain, which Amazon acquired two years ago.

" 'Check in' and 'hand in' is more important than 'checkout' or 'hand out,' " said Richard Crone, a payments consultant. "Check in is where they will personalize the customer's journey."

In addition to Amazon Go, the e-commerce company is also pursuing other data- and retail innovation-driven projects to broaden relationships with consumers. For example, Amazon has also spent billions of dollars developing "smart doorbell" technology that uses cameras to power shopping, fulfillment, and payment for delivery.

"With Amazon Go they're already tracking every movement by the customer," Crone said. "The key here is the more Amazon sees, the smarter Amazon gets."

Amazon Go has emerged over the last two years while about two dozen other firms simultaneously are developing other checkout-free technology globally, deploying a mix of existing stores and new locations. Checkout-free technology has not been perfected, nor has contactless hand payments.

"The challenge with these projects is that the retailer has to change or update its point of sale, while the customer has to enroll and entrust their biometric data to the retailers," Bareisis said.

"There have been many trials of biometrics-based payments at the POS, such as using fingerprint readers at checkout."

Some of these efforts have failed. Pay By Touch, which used a fingerprint to link to a payment account, failed in 2008.

But expansion of biometric authentication methods, such as Apple's Touch ID and Face ID, has pushed the concept to the mainstream, and finger-based payment technology has been deployed elsewhere. In the past year, Sthaler has deployed finger payments in the U.K.; and Nets has tested the technology in Denmark.

"As with the Amazon Go concept, using biometrics to pay at checkout is not a new idea," said Julie Conroy, research director at Aite Group. "However, as they do frequently, Amazon is taking the concept to the next level. Removing the 'ew' factor by having multiple people touch a physical device, as was the case with Pay By Touch, by transitioning to a visual scanner is a big improvement."