Aram Sinnreich recently went grocery shopping at a Whole Foods
Market in his hometown of Washington, D.C., and realized he had left his wallet
at home. He had no cards and no cash, but he had no reason to worry — at least,
not about paying for his food. “I used my iPhone to pay, and I unlocked it with
my face,” he said.
That’s when it struck him: We are just one small step away from
paying with our bodily features alone. With in-store facial-recognition
machines, he wouldn’t even need his smartphone. Sinnreich, associate professor
of communication studies at American University, said he got a glimpse of the
future that day.
Biometric mobile wallets — payment technologies using our faces,
fingerprints or retinas — already exist. Notable technology companies including
Apple and Amazon await a day when a
critical mass of consumers is sufficiently comfortable walking into a store and
paying for goods without a card or device, according to Sinnreich, author of
“The Essential Guide to Intellectual Property.”
Removing the last physical barrier — smartphones, watches, smart
glasses and credit cards — between our bodies and corporate America is the
final frontier in mobile payments. “The deeper the tie between the human body
and the financial networks, the fewer intimate spaces will be left unconnected
to those networks,” Sinnreich said.
Companies are refining biometric services
After a slow start, the global mobile-payment market is expected
to record a compound annual growth rate of 33%, reaching $457 billion in 2026,
according to market-research firm IT Intelligence Markets. As payments move
from cash to credit cards to smartphones, financial-technology companies, known
as fintechs, have been honing their biometric services.
Juniper, a U.K.-based firm that provides research on the global
high-tech communications sector, said it expects growth to be driven both by
“industry standardization initiatives” like Visa’s Secure Remote Commerce and
by the introduction by smartphone vendors of different forms of biometric authentication.
“Using biometrics as a method of payment is going to be pretty
popular in the future,” said Hannah Zimmerman, associate attorney with Fey LLC
in Leawood, Kan. She said this will be propelled by “the globalization of
commerce” and the fact that companies in the U.S. will want to find new ways to
facilitate cross-border transactions.
Frictionless payments lead to more spending
It will make shopping easier for consumers and, if studies on
mobile payments provide a barometer, more lucrative for companies. A study
carried out by researchers at the University of Illinois at Urbana-Champaign
found that the number of actual purchases increased
by almost one quarter when people used Alipay mobile
payments.
Using a mobile wallet made people likely to spend more on food,
entertainment and travel, the university study found. In dollar terms, people
using mobile payments spent an average of 2.4% more than those who did not use
them. One theory: If we don’t handle credit cards or cash, we don’t consider a
transaction’s consequences.
People who use Amazon’s Echo smart speaker spend
66% more on average at the online retailer than other
consumers, according to a survey of 2,000 Amazon customers from Chicago-based
research firm Consumer Intelligence Research Partners. Of course, people who
have the money to buy smart speakers may also have more to spend.
Still, it provides a window into the world of frictionless
spending: Echo owners spend $1,700 annually at Amazon versus $1,300 among
Amazon Prime members — who must pay a $99 a year subscription — and $1,000 for
all Amazon customers in the U.S. Some people may have both Echo devices and Prime
accounts. (Amazon did not respond to a request for comment.)
Facial
recognition is already widely used
Facial recognition has already made its way into financial
services. Mastercard and Visa have security features that require people to
use their faces to log into their accounts on their phones. Apple’s iPhone X
enables people to use “Face ID” to unlock their phones, and
Samsung’s Galaxy S8 and S8+ has an iris scanner.
Amazon’s Rekognition facial-recognition service can also identify both objects
and people.
The facial-recognition market is projected to double to $9 billion between
2018 and 2024, according to Mordor Intelligence, a consulting and analytics
firm.
Juniper predicts that 80% of smartphones will have some form of
biometric hardware by 2023, representing just over 5 billion smartphones. That
has traditionally meant fingerprint sensors, but facial recognition and iris
scanning will become more prominent over the next five years, with adoption
surpassing 1 billion devices, Juniper forecasts.
China’s biggest mobile-payment platforms, Ant Financial Services
Group, the Alibaba-controlled entity that operates
Alipay, and Tencent Holdings Ltd. , which runs WeChat Pay,
have already launched facial-recognition machines at points of sale. They
typically require customers to register for the first time via SMS.
In 2017, KPro, a KFC brand in Hangzhou, China, introduced Alipay
facial-recognition technology at points of sale. Today, KFC uses its Alipay’s “Smile to Pay” facial
recognition technology in more than 700 stores across China. (Before making
their very first payment, customers must log in using their phone.)
The neoliberal takeover of the human body’
“Every technological necessity exists in the real world and is
used commercially,” Sinnreich said. “It just hasn’t all been integrated into
one biometric-payment method yet because it would creep people out.” He said
it’s Silicon Valley’s end game: “It’s the neoliberal takeover of the human
body.”
The Federal Trade Commission has taken action against a variety
of fintech companies alleging false advertising and nondisclosure of
material information related to customer funds. New products must take into
account “important consumer-protection principles,” from mobile payments to
virtual currencies to crowdfunding, the FTC said.
Financial-services companies have a vested interest in making
sure it’s more difficult to steal their customers’ identities, said Eva
Velasquez, CEO of the Identity Theft Resource Center, a San Diego–based
nonprofit organization that supports victims of identity theft. “They are
deeply incentivized to fight and deter fraud. Biometrics are very hard to
fake.”
Apple and Samsung have sold tens of millions of devices enabled
with fingerprint technology, another relatively easy way for people to provide
identification without having to carry a wallet, smartphone or credit card.
Like all biometric information, however, if lost or stolen,
fingerprints can’t be changed like a password.
That could cut both ways: They are notoriously difficult to
replicate, but if hackers ever developed the technology steal a person’s
identity by replicating their fingerprints or facial features to buy goods or
take out loans in their name, that could spell big trouble for consumers and
the companies that would end up having to foot the bill.
In 2015, the U.S. Office of Personnel Management said the
fingerprint data of 5.6 million people was stolen in two separate cyber
attacks. It’s not clear when the first attack happened, but it was discovered
in March 2014; the second attack occurred in May 2014 and was discovered in
April 2015. Officials said at the time that there was no evidence of abuse but
that a counterintelligence problem could emerge in the future.
The worst-case scenario for stolen fingerprints: Lifted
fingerprints or molds of users’ fingerprints can fool some readers, Zimmerman
noted. But in the case of the OPM, foreign powers could use the stolen
fingerprint data to cross-reference with fingerprints taken from Americans who
could be working as agents overseas under assumed names.
Consumer advocates are also worried about biometrics being used
for commercial purposes. Three states — Washington, Texas and Illinois — have enacted statutes
governing biometric information privacy. “The current lack of regulation is
surprising given that biometric information is permanent and unique to each
individual and, thus, creates a concern for identity theft,” Zimmerman said.
Other states have proposed bills for such laws.
Mobile-payment services will evolve slowly
Sinnreich, the communications professor, said he believes
biometric payments will happen in the U.S. but only when people are comfortable
with them. The amount of data we could eventually give up would leave people
exposed to a life of “digital redlining,” he said. “What does it mean that we
are inviting these networks into our bodies and interpersonal relationships?”
The Chinese government has used facial recognition to identify
people, and, last year in the U.S., the Orlando Police Department said it was
testing Amazon
Rekognition to help prevent
crime. Amazon has acknowledged that this technology can be used
by law enforcement.
Companies could also profile customers and do what online
retailers like Amazon and eBay already do: tempt them
with items based on their previous purchases. “Whether you’re a government or
corporation, there’s an incentive to encourage citizens to adopt total
surveillance in order for the system to work better,” Sinnreich said. “How much
I tip an Uber driver today could
affect how much I might pay for a mortgage in 20 years.”
Consumers are understandably spooked by the prospect of
governments, law-enforcement agencies and corporations identifying us through
facial recognition, or even via our voices and fingerprints, the Identity Theft
Resource Center’s Eva Velasquez said. “Some people will say, ‘You can have my
biometrics when you pry them from my cold, dead fingers.’”
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