Forget Dongles And Passwords, The Future Of Mobile Payments Is Biometrics

With the two largest smartphone makers in the world getting behind the idea of biometric scanning, credit card companies may start to take it seriously as well.

Image: Chad Miller/Flickr

By some estimates, Americans could be spending as much as $90 billion a year in mobile payments by 2017—a sharp increase from the 12.8 billion spent in 2012. With that much money on the line, it's no wonder that many tech companies are scrambling to find some way to get in on the action however they can.

How digital payments can best be managed remains an open question, however. The most-hyped solutions have been from companies like eBay and Square, a startup co-founded by former Twitter mastermind Jack Dorsey. Square in particular has been making impressive strides, inking deals with major retail chains like Starbucks and, more recently, Whole Foods.

Aside from basic concerns about the usability and aesthetic value of something like Square's card-swiping dongle, the chief concern holding digital payments back from the mainstream has to do with security. Old-fashioned passwords seem increasingly untrustworthy, particularly when it comes to something like a mobile device that migrates between countless wireless networks on any given day.

So what if there was an easier way to guarantee that only the rightful owner of a smartphone would be the one accessing the device? Apple introduced a fingerprint scanner last year when it unveiled its latest iPhone model, and just yesterday Samsung revealed that it would follow suit with its new Galaxy S5.

With the two largest smartphone makers in the world getting behind the idea of biometric scanning, credit card companies may start to take it seriously as well. Speaking to Gizmodo this week, Jon White, head of marketing for mobile strategic alliances, said that the commerce giant is "working with these technologies," and finds them "very interesting."

It's easy to see the potential benefits of biometric scanning. If applied properly, they could speed up the checkout process for physical retail locations. It's hard to pin down an estimate on just how much transactions would be sped up, but one report said checkouts could be 70 percent faster. And they could also help secure against credit card or identity theft since the user would be putting their credit card in front of less people and verifying their location at the time of every purchase. It will be much more obvious that something fishy is going on if your credit card is charged for activity in New York and Texas on the same day if your phone can provide evidence that you were in one location or the other, in other words.

That being said, White was careful to sound a cautious note about biometric data creating new kinds of vulnerabilities.

"It's a different consideration between drawing a squiggle to unlock a phone or putting in a four-digit password to access my mobile to what's required to access my bank account," White told Gizmodo. "Secure management of payment credentials are the priority. I think there will be moves to form partnerships in this space though. That will continue, and we will pursue these technologies, but we need these multiple layers of encryption to preserve customer trust and integrity."

As with any emerging technology, using biometrics in digital payments will ultimately be a matter of consumer acceptance. But while the technology might still conjure visions of cyborgs and Matrix-style hackers, it looks like average mobile users are starting to warm up to the idea as well. Last October, a survey sponsored by PayPal and the National Cyber Security Alliance found that 53 percent of respondents were comfortable using a fingerprint scanner. An earlier study from the Ponemon Institute had similar results, finding that the majority of respondents "trusted organization such as their bank, credit card company, health care provider, telecom, email provider or governmental organization to use factors such as voice or fingerprints to verify their identity."

Is it any surprise, then, that even Apple is taking another look at its mobile payment systems?