Cash, Plastic or Hand? Amazon Envisions Paying With a Wave
Cash,
Plastic or Hand? Amazon Envisions Paying With a Wave
Tech giant plans
terminals to let consumers link credit card information to their hands
By AnnaMaria Andriotis Jan. 18,
2020 8:00 am ET
Amazon.com Inc.
wants to make your hand your credit card.
The tech giant is creating checkout terminals that could be
placed in bricks-and-mortar stores and allow shoppers to link their card
information to their hands, according to people familiar with the matter. They
could then pay for purchases with their palms, without having to pull out a
card or phone.
The company plans to pitch the terminals to coffee shops,
fast-food restaurants and other merchants that do lots of repeat business with
their customers, according to some of the people. Amazon declined to comment.
Amazon, like other tech companies, is
trying to further integrate itself into consumers’ financial lives, leaving
banks and card networks on edge. Apple Inc. introduced a
credit card last year, and Google is rolling out checking accounts. If the Amazon
terminals succeed, they could leapfrog mobile wallets such as Apple Pay while
expanding Amazon’s already-extensive access to consumer data.
Amazon’s projects are closely watched
both by tech and financial companies, which are increasingly colliding in
payments. Amazon has been experimenting with payments at its Amazon Go stores,
where customers can walk out without stopping to pay. It has also been building
out Amazon Pay, a digital wallet that consumers can use to make payments at
online merchants not owned by Amazon. Chief Executive Jeff Bezos has stressed the importance of financial
services and payments to some senior executives, The Wall Street Journal
previously reported.
The plans for terminals are in early
stages. Amazon recently began working with Visa Inc. to
test transactions on the terminals and is in discussions with Mastercard Inc., according
to some of the people.
Card companies are trying to figure out whether tech giants such
as Amazon intend to be collaborators or competitors, though some believe it is
safer to participate in big tech’s payments ambitions than risk being left out.
Amazon, for its part, wants the card companies’ expertise in safeguarding
consumers’ card accounts.
Still, Amazon will have to allay the
concerns of card issuers and networks, including how the terminals would detect
fraud. The company will also have to win over customers wary of providing even
more personal information and navigate a climate in which regulators are increasingly skeptical of big tech.
Amazon envisions that customers would first use the terminals to
link their debit or credit card information to their hands, the people said.
The company is weighing a few options
for how to do so, one of the people said. For example, customers might insert
cards into a terminal and then let the terminal scan their hands. From then on,
they would only need to place a hand over the terminal to pay at a
participating merchant.
Amazon recently filed a patent application for what it described
as a “non-contact biometric identification system” that includes “a hand
scanner that generates images of a user’s palm.”
Data that would pass through the terminals, including where
consumers shopped and when, would be stored on Amazon’s cloud, according to
some of the people. The company would like to integrate this data with
consumers’ Amazon.com spending, those people said. That could give Amazon more
leverage to charge higher prices to advertisers based on the idea they can
better predict what customers are likely to buy.
The New York Post earlier reported
that Amazon was testing a payments system that would
let consumers use their hands to pay at Amazon’s Whole Foods chain.
Amazon has had limited success with
another payments project pitching bricks-and-mortar merchants on accepting its Amazon Pay digital wallet. One
roadblock: Stores didn’t want to remind their customers about Amazon and risk
encouraging them to buy there instead. That could be a challenge with the new
terminals as well.
In the near term, Amazon wants to nudge card issuers and
networks to innovate along with it, according to people familiar with Amazon’s
strategy. Some payments companies worry that in the long term, tech companies
including Amazon could just cut them out.
Card companies have raised concerns about the potential for
fraud with the terminals, including how to catch people who try to link their
hands to a stolen card. Amazon has said it could blacklist people who use the
system fraudulently, some of the people said. But that might not stop cheaters
from making one-time purchases of electronics or other big-ticket items.
Card issuers are also asking how consumers would be able to add
more than one account to their palms and how they would be able to choose
between those cards when they pay.
Write to AnnaMaria
Andriotis at annamaria.andriotis@wsj.com
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