Amazon Proposes a Revolutionary New Payment Technology: Your Hand.
Over the past year, we’ve seen an increasing push from technology giants into the financial services space. While Google, Apple and Amazon have been offering payment services for some time, more recent moves in the space have been more aggressive, encroaching on traditional avenues and expanding into new markets.
Apple was the first to breach the space, announcing the Apple Card in March of 2019. Facebook followed in June, announcing their intentions to establish their Libra cryptocurrency, potentially opening the avenues of eCommerce to underdeveloped nations with underbanked populations. In November, rumors spread about Google’s intentions to offer checking accounts, to integrate with their suite of products.
Just last week, word got out that Amazon is planning on stepping into that space too, with a new technology that has potentially huge implications for retailers. The technology in question? An intriguing new platform for payment: your hand.
According to the Wall Street Journal, Amazon is in the process of creating checkout terminals for brick-and-mortar retailers that would allow shoppers to link their credit card information to their hands. Instead of swiping a card, reaching for cash or pulling out your phone, you simply wave your hand by the terminal and the device scans your palm when it comes time to pay.
It’s a retail-as-a-service (RaaS) product that could be a great benefit to merchants who are trying to cut down friction at the checkout. But just how popular could it potentially be? To get an indication, let’s take a look at the projections for a closely related category: wearable/contactless payment technologies.
According to research and consulting firm Reports and Data, the global wearable payment device market is primed for explosion. The category is expected to grow from $312 billion in 2018 to a whopping $1.1 trillion by 2026. This demonstrates a powerful upward trend in regard to contactless payment adoption.
In Europe, Asia and Oceana, contactless payment methods are already very common. In Australia, the adoption rate is 92%. In the Czech Republic, it’s 91%. Singapore? 63%. The UK? 49%. In the United States, we’ve been much slower to adopt contactless payment. The adoption rate here? Just 0.6%! Obviously, there’s room to grow.
Taking a look at the market specifically, the U.S. is very much primed for a boom in the contactless payment arena. This becomes obvious when you dive into the “why” behind our low adoption rate. Long story short, it has nothing to do with demand. In other countries with wider adoption, the contactless technology is built right into the credit cards. American banks and credit card institutions simply didn’t want to pay for it. It would have cost them an additional $0.35 per card for cards with the built-in antenna for contactless payment. It adds up quickly. Of course, Amazon’s hand scanner avoids this problem entirely.
The technology has several other additional advantages over wearables, as well. For one, there’s no additional investment on behalf of the consumer in a new device, everything you need is already attached to your body. Secondly, you don’t have to worry about remembering your payment device or the device running out of batteries. And third, it’s easier to steal a phone, a ring or a watch than it is a hand.
If the technology pans out, and is affordable enough to implement, Amazon could be looking at a potential gold mine. Looking at the bigger picture, RaaS might be one of the biggest blue-sky opportunities right now for the tech giant.
Take a look at Amazon Go stores, for example. While Amazon has introduced some very interesting technology with their Go stores over the past couple of years, there are some definite hurdles in terms of scalability. But in terms of enabling other brick-and-mortar stores with RaaS, the experiment has moved Amazon way up the curve in terms of learnings and technological development. Just due to the very nature of trying to work outside the norm, they’ve been forced to constantly innovate. Now they’re working with several powerful pieces of technology that they could repackage and put into market for other retailers to implement in their own stores. It’s a potential cash cow.
Another example is their Dash Smart Shelf. Introduced in November, the shelf houses office supplies and automatically reorders them when stocks run low. Certainly, this technology could be repackaged to monitor stock on the retail floor, if Amazon so desired. And, of course, Amazon Web Services is there to tie it all together in the cloud. Yet another profit center.
“Amazon Brick-and-Mortar Services” could very well be the next big thing for retailers, if that’s the way they decide to go. Given the vast number of tools they have in their arsenal, it wouldn’t be surprising at all to see a robust line of brick-and-mortar offerings roll out later this year.
Stay tuned, this one is going to be interesting.
What do you think about Amazon’s new hand-scanning payment technology? Do you think contactless payments will catch on in the U.S. they way they have in other parts of the world? We’d love to hear what you have to say. Sound off on social media now and join the conversation.