Apple Fingers Payment Revolution

It was an innocent enough remark but it triggered a storm of outrage: Earlier this week, New York mayor Mike Bloomberg advanced the idea of using fingerprint-based locks in public housing buildings, generating a storm of outrage from candidates seeking to replace him.

Meanwhile, the tech world has been driven to excitement by what appears to be the appearance of a fingerprint scanner in the next version of the iPhone.

So the question now should be: will the fingerprint scanner in the new iphone merely be a gimmick that will remain largely unused and forgotten a year from now or will it herald a new age of respect for a centuries-old technology?

In the US, fingerprinting is used in a number of areas but the one that resonates most with the public is the criminal space. People working for the government, people working in Finance, or people with access to all sorts of “limited access” information are routinely fingerprinted; Members of the military and civil employees get fingerprinted; Parents applying to adopt a child are fingerprinted; People getting a green card or applying for citizenship are fingerprinted; Some Windows-based PCs have had fingerprint scanners built-in for almost a decade and it is becoming increasingly common to include fingerprint scanners in doorlocks to rooms in banks and government offices. Yet large portions of the US public are opposed to fingerprinting, fearing that it will lead to the state building up a large database of identification of individuals around the nation (of course, this seems to be OK for the social security administration, which has a number that has become the ubiquitous way of providing context for information to employers, banks, mortgage agencies, etc…).

By contrast, people overseas are fingerprinted on an even more regular basis. For example, European citizens applying for a passport all provide their 10 fingerprints at application time and that information is then record on a chip that sits inside the cover of their passport (such information can be used at border control in every country, including the US). The same is true for identity cards that are common through most of the developed world.

So the introduction of fingerprinting sensors within the next generation of iPhones seems like a feature that could outrage Americans but be useful to everyone else. The Chinese Qin dynasty (around 200BC) used fingerprints in clay tablet as a way to authenticate official documents and help solve burglary investigations but it wasn’t until the late 19th century that the concept took hold in the west, mostly for criminal purpose.

Since the early 2000s, fingerprinting has increasingly be used for non-criminal purpose outside the United States. In the UK, for example, schoolchildren are routinely fingerprinted, with digital matching of their fingerprint being used to check out books at school libraries, register class attendance, or pay for school meals.

iPhone fingerprinting

Last year, Apple acquired Authentec, one of the leader in fingerprinting technology, for $350 million (one of its largest acquisitions), signaling that the company is serious about this space. Authentec is the type of the company you don’t hear much about in the news because it made technology that was largely embedded into other devices. In fact, at the time of the acquisition, the company was providing technology that powered Lenovo and Samsung laptop’s fingerprints scanners, the kind of technology that, over the last year, has disappeared from those product lines. The company was also in the process of switching to offering a full suite of security services in the mobile space, with Samsung as one of its biggest customers there.

Apple could have, like other companies, gone out and licensed the technology for inclusion into its devices but it felt this was important enough a piece of technology to buy it out (witness, by contrast, how Apple licenses technology from Nuance to power Siri). The disappearance of the technology from many of Apple’s competitors’ lineup seems to point to the acquisition having brought a violent end to licensing agreements relating to fingerprint scanners.

But why would Apple consider a technology that is largely seen as negative? Well, for starters, Apple always looks at things differently and it often can convince its consumers to modify their behavior. With a treasure trove of hundreds of millions of credit cards, Apple sits on a digital mine when it comes to payment data. The last thing it needs to do in order to create a new revolution around payment is find a way to identify every user in a unique fashion and fingerprints have, for over a century, proven to be that type of technology. So the key to profile management on the next generation of electronic devices may be fingerprinting and Apple has bought itself a large seat at the table.

Imagine, for example, turning on your iPad by pressing on the button at the bottom of the screen but this time things are different: the application your girlfriend or wife had installed on it are no longer there or the games your kid downloaded don’t show up: instead it’s your own space, tied to your fingerprint and when your kids come, it’s their space tied to their fingerprint and so on. Each desktop now aligned to a single profile attached to a fingerprint.

Go one step further and take your phone to a merchant like Starbucks. The merchant’s register is tied to your iPhone (they do this already with an app) but now all you have to do to make a payment is press that fingerprint scanner and your data is authenticated, tied to your credit card and payment is made with proof of ID. Square may have a hard time competing with such a solution and Apple could revolutionize how money is traded.

Add in Airdrop and that fingerprint scanner can become a way to beam money from your device to a friend’s device when splitting the check at a restaurant. No cash required, with all banking managed by Apple’s iWallet, which already includes your credit card information.

Walk into the Apple store and buy a new device: To pay today, you hand your credit card and it is swiped into a Verifone custom sleeve on the iPhones Apple employees carry in the store. Tomorrow, you just press the button to give them your fingerprint and the data that already identifies you on the Apple servers and clears the transaction: No need for any NFC chip, or even credit card to make those payments, just a finger.

If Apple presents those use cases, they will be hailed as revolutionary and Apple will get an early lead in the next generation of payments and profile management tools (in 2011, Motorola tried to include a fingerprint scanner in its Motorola Atrix phone but the feature was so unreliable and had so few use cases attached to it that few consumers ever used it). Those efforts could be extended to the security space (eg. use your fingerprint instead of a password to unlock your phone), the general identity space (use your phone as an approved form of ID in corporate environments) and thus give the company a new level of control in the corporate arena.

Along the way, the company could essentially demystify fingerprinting and build one of the largest profile databases in existence.

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