Retailers face difficulties as customers are ready to use biometric payments
Amazon One, their contactless palm recognition payment system, was introduced three years ago this September.
In 2020, the omnichannel retailer opened two of its Amazon Go locations in Seattle to accept payments. After registering for the service, customers pay for items by hovering their hands over a retail gadget. The hardware of the system records the smallest details of the palm, such as vein patterns and lines and ridges, in order to create the user’s palm “signature.” To register, users do not need to have an Amazon account.
When unveiling the technology, Amazon claimed it would expand the system’s use in Amazon shops, claim that it had “broad applicability beyond retail stores,” and make it available to other organizations, including office complexes, stadiums, and merchants. Considering how secure and private palm recognition is in comparison to other biometric choices, Amazon chose this method. In the aftermath of the COVID-19 epidemic, the contactless method was seen as welcome and opportune.
Three years or so later, Amazon One appeared in a Whole Foods Market shop in Austin, Texas. In 2017, Whole Foods Market was acquired by Amazon for $13.7 billion. This is the first Whole Foods Market outside of Seattle to accept the payment method. The addition of the system to each of the seven Austin sites is now underway.
Amazon said at the same time that the Colorado Rockies major league baseball team’s home field, Coors Field, is the first sporting venue to employ Amazon One for age verification.
“Customers love the convenience of paying with their palm; however, when it comes to purchasing alcohol, friction is reintroduced as customers must produce a government-issued ID for age verification,” according to a press statement about the installation. “We’re solving that customer pain point and improving the guest experience with the launch of a new capability called” age verification, “which enables adult customers ages 21 and over to purchase alcoholic beverages by simply hovering their palm over an Amazon One device, without digging into their wallets for a physical government-issued ID.”
Panera declared it was testing the technology in late February of this year. According to a Panera news release, it is now the only restaurant in the country to use it for payments and loyalty.
More than 100 Whole Foods Market sites, a few Amazon Go and Amazon Fresh outlets, and third-party businesses including convenience stores, travel agencies like Hudson, and retail establishments in airports carried Amazon One as of early May.
RetailCustomerExperience contacted Peter Galvin, chief growth officer of NMI, a comprehensive commerce enablement technology business, to find out more about how and why Amazon One is becoming popular. Customer opinion around payment innovations was the main topic of the company’s first Payments Innovation Pulse Report. In October 2022, NMI conducted a poll of 1,000 American customers. According to the statistics, speed and convenience are the main factors influencing customer preferences for new payment technologies, such as contactless and biometric payments, and most consumers are willing and eager to test them.
Compared to 24% of customers aged 41-56 and less than 10% of consumers aged 57 and above, 55% of consumers aged 25-40 and 58% of consumers aged 18-24 have utilized biometric payments. According to NMI, 68% of customers between the ages of 25 and 40 who are not familiar with biometric payments are inclined to use them if a company provided them. In this situation, consumers of other age groups are less likely to utilize biometric payments.
According to the study, over half (47%) of customers said they would probably utilize biometric payments if a company provided them.
In an email conversation, Galvin elaborated on the facts and conclusions.
Q. How would you characterize the current state of biometric palm scanning technology in the retail industry—is it just starting off, establishing itself, etc.? Although Amazon is undoubtedly driving it, do you anticipate that merchants will have more alternatives in terms of technological solutions in the future?
The development of biometric palm scanning is still in its early stages. Amazon is now the largest force behind this technology. True biometric palm scanning is not being used at any of the other big players’ retail locations. The ability for Amazon customers to register, enter their payment details, and then link those details to their biometric data within their Amazon account is a significant benefit.
Even though palm scanning payments are still in their infancy, their existence serves as evidence that consumers are constantly searching for more convenient ways to make purchases. Although the use of biometric backdrops on mobile devices is only getting started, the transition from mobile devices to biometrics at checkout is still in its early stages.
What factors could make merchants hesitant to use the technology? Are data security issues or internal resources needed?
A major reason why shops are hesitant to use this technology is because it is currently rather costly for them to do so. Additionally, retailers would have to deal with the inconvenience of resetting many of their existing payment systems, which are not configured to support biometrics. Customers’ privacy concerns are another significant obstacle for merchants to overcome since they are concerned about the potential consequences of an organization losing their biometric data. The long-term goal is quite solid, even while short-term acceptance is being hampered by resources, upgrading prices, and privacy concerns. Retailers will find it much simpler to use these technologies in the future when expenses are reduced and payment mechanisms are finally improved.
Q. How far along is the customer with this technology? Given that younger consumers will utilize it, is it very generational?
Since younger customers are more focused on utilizing technology for payments, the adoption of this technology is currently quite generational. Many Gen Zers and Millennials prefer digital wallets over actual payment cards and don’t even carry cash. Indeed, 67% of Millennials already use digital wallets, according to recent data. These younger customers are the ones who have embraced biometric payments the most, and they will continue to be the main forces behind adoption.
What do merchants and customers need to do in order for technologies like the biometric palm scanning technology offered by Amazon One to become widely used?
Customers need to become more accustomed to utilizing these alternatives at checkout if new payment methods are to be adopted more widely. Retailers must also make it simpler for customers to sign up for biometric technology, with security being a key consideration. Further acceptance would also be greatly aided by a more ubiquitous method of bringing biometric data to a storefront and having a shop process it. As of right now, a customer’s smartphone stores biometric data locally, which the business can use to verify the customer’s payment. The dynamic for customers is significantly altered by new technologies that use the same biometrics to confirm the payment on a public device, such as a palm scanner at the register. Easy in-store registration in biometric technology may make customers feel more at ease utilizing biometrics in a retail context, while greater acceptance will undoubtedly rely on how consumers feel about paying this way.
Q. Do you believe the present biometrics client experience is satisfactory, or do you think it might be improved? If so, how?
A. I am unable to describe how Amazon’s particular consumers feel about this technology since I do not know enough about them. All things considered, consumers are growing more accustomed to utilizing biometrics on their phones and continue to rely on them when they choose to use biometrics to pay in-store. Although this is a fantastic beginning, as technology advances and consumer and merchant usage rises, the customer experience will only become better.
What steps should merchants take to ensure that they are prepared to accept biometric payments?
A. Since biometric payments are the way of the future, retailers today must ensure that they are prepared to accept them. Accepting digital and mobile payments is one of the most important things that merchants can do at the moment because it’s a crucial first step towards accepting biometric payments. To do this, merchants need to collaborate with their independent software provider and independent sales groups. Additionally, as legacy or antiquated tech stacks are probably ill-prepared to handle emerging techniques like biometrics, merchants must operate on contemporary platforms. Selecting the best ISV or ISO partner to manage the integration and continuous administration of the payment system will save merchants a great deal of time, money, and trouble because many shops lack the technical know-how or resources to deploy new payment technology on their own.
Q. What were the report’s main conclusions and most unexpected findings?
A. One of my biggest shocks was the data findings on biometric payments. 91% of customers were already familiar with biometric payment technology, according to our survey. That stood us as a really high figure for a relatively new technology. Only 36% of buyers, meanwhile, have made a purchase using biometric technology. The absence of biometric payment methods is the main cause of this. 47% of respondents, including those who were not aware of biometric payments, stated that they would probably use the technology if a company offered it. This shows that customers are searching for these kinds of payment methods, and it is the responsibility of retailers to ensure that they accept biometric payments.