JPMorgan Chase's plan for face and palm payments

JPMorgan Chase is preparing a broad rollout of a biometric authentication system at U.S. retailers in 2025, following experiments it has run over the past year.

It worked with Pasadena, California-based biometrics technology provider PopID on two pilots to evaluate consumer and merchant response. The first biometric pilot was at the Formula 1 Crypto.com Miami Grand Prix race in May 2023, while the second, involving many more users, ran for the second half of 2023 at a JPMorgan office cafeteria, operated by food concession provider Aramark.

The pilots' aim was to get merchant and consumer feedback, as well as to understand and enhance the technology before a full market launch in 2025, said Prashant Sharma, JPMorgan's executive director of biometrics and identity solutions. "We want to streamline the customer and merchant experience by using biometrics to reduce checkout time and increase loyalty," he said.

JPMorgan will offer biometric payments as part of its omnichannel payments platform, which also supports Tap to Pay, which allows mobile phones to accept contactless payments without add-on hardware. The bank will most likely work with product partner PopID for the launch, but could also deploy some of its own payments technology, Sharma said.

In the lead-up to launch, JPMorgan has been testing the robustness of biometric payments both internally and with independent third-party labs. The bank wants a technology that avoids false positives — where someone scans their face in a store and is identified as someone else, leading to a stranger's card being charged. "So far, we've not seen any false positives," Sharma said.

The biometric technology also needs to be able to differentiate between a genuine image of a person or a photo/video or deepfake.

"Our technology can detect the difference between a photo or video and a real person," Sharma said. Even without having seen any false positives, "if we feel it isn't the real user, we'll stop the transaction," Sharma said.

Despite these concerns, biometric payments are more secure than tapping a card, Sharma said.

"People can steal your card, but they can't steal your face or palm," he said. "And, since biometric payments are in-store transactions, it's very difficult for someone to impersonate someone else."

Therefore, Sharma argues that biometric payment transactions should not be classified as card-not-present, as they currently are. "We will work with the card schemes to get biometrics payments reclassified," he said.

JPMorgan's biometric platform supports two identification methods — face identification and palm-vein scanning. For face identification, users enroll via their own phones on a dedicated mobile website where they enter their personal details. Then, after a liveness check, they associate a credit or debit card or a bank account with their face scan.

Palm-vein enrollment requires a touch-free, in-store infrared camera. The JPMorgan cafeteria pilot used palm vein scanning, while the Grand Prix pilot tested face identification.

Sharma sees several benefits from merchants adopting biometrics at the point of sale, including a checkout time of under 90 seconds and the ability to pull up a customer's order history to quickly reorder a favorite item.

"Traditionally, merchants only know a frequent customer is in their store when they swipe their loyalty card at a POS terminal, when it's too late to make purchase recommendations," he said. "But, if shoppers identify themselves with face or palm ID when they enter a store, they can receive personalized recommendations and offers such as loyalty points redemption."

Amazon has a similar palm-vein verification model in place at its Just Walk Out and Whole Foods stores. However, it has been experimenting with whether to use the palm scan at the start or end of the shopping experience. In two stores Amazon operates near the World Trade Center in New York City, one asks users to scan their palms upon entry, and another requires the scan when exiting.

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"Merchants need to identify their customers before they get to the checkout to increase their margins as this is where additional dollars are generated," said Richard Crone, CEO of Crone Consulting LLC. "This is a big upside for Chase as one in two U.S. households have a Chase debit, credit or general-purpose reloadable card, and Chase is losing ground to digital wallets."

Crone said Chase needs to link its customers' biometric IDs with its mobile banking app to enable them to authenticate themselves when they scan their palm or face at a store. For non-Chase customers using its biometric technology, it will also have to provide a two-factor authentication method such as texting a code to their registered mobile numbers.

John Miller, CEO of PopID and its parent company Cali Group, which also owns fast-food restaurants in the U.S, says his goal is to provide an alternative to Apple Pay and Google Wallet at the point of sale.

"We started adopting PopID six years ago in our own restaurants, and the technology has also been implemented by other companies' restaurants," Miller said.

PopID has two elements: PopID Check In for reviewing favorite orders and loyalty points, and PopPay for checkout and payment. PopID doesn't charge issuers for payments. Instead, PopID charges merchants every time it is used for a check-in to view orders and loyalty. PopID is designed to work with any processor and all card numbers registered by users are tokenized, Miller said.

"We make a charge on behalf of the card networks for biometric payments, but we don't mark up the card network fees much, if at all, depending on the customer," he said. "PopID charges merchants different rates for card-based and ACH-based biometric payments, depending on the customer and acquirer. We can charge merchants less for ACH-based biometric payments as there are no interchange fees that must be shared with the card network."

So far this year, PopID has processed 100,000 PopID check-ins to see their favorite orders or loyalty points and 20,000 PopID payments. "People are more comfortable scanning their face or palm to check their loyalty points and then using their card or phone for payments. But eventually we expect all our users to use PopID for check-in, loyalty and payments," Miller said.

An early adopter of PopID is Indianapolis, Indiana-based casual restaurant chain Steak n Shake, which has just finished rolling out PopID's technology to all its 300 U.S. locations.

Steak n Shake CFO Steve May considers convenience to be biometrics' main benefit.

"Guests can easily see their order history, and select or modify a previous order, and when they 'pay with their face,' the transaction is very fast and easy," he said. "The Steak n Shake location that first adopted the system has seen a 4% transition rate to face pay. The biggest challenge has been building awareness among customers, so they're inspired to create a profile that enables them to use the technology."

Consumers are more likely to adopt biometric payments in a fast-food restaurant or coffee shop, where they value a faster transaction, said Don Apgar, director of merchant payments at U.S.-based Javelin Strategy & Research.

"The merchant perspective is trickier, especially for large chains with tens of thousands of checkout lanes," Apgar said. "The cost of the [biometric] hardware isn't insignificant at around $300-500 per lane, largely to support customers who are already paying by chip-tap or dip."