September 17, 2014 -
This is a guest post by Janice Kephart, founder of the Secure Identity & Biometrics Association (SIBA).
Last week I received a hurried Wall Street media inquiry regarding my view, on behalf of the Secure Identity & Biometrics Association (SIBA), of the potential market impact of Apple’s release of Apple Watch and Apple Pay. Determining the potential impact and growth of new biometric applications (assuming they work) greatly relies on the consumer’s perception of the product’s utility and security. There is no doubt the biometric industry adores Apple for its release of iPhone 5 Touch for taking on the cost and challenge of infusing consumers with a comfort zone with biometric applications.
Nonetheless, the industry watched closely at the response for lessons learned. While watching for lessons learned is important with the release of Apple Watch and Apple Pay, industry analysts should be able to anticipate the potential acceptance rate of commercial biometric applications a little easier. One way to do so is to look at the value proposition for the consumer versus concerns over security risks. The greater the potential interaction of the product with insecure or unknown entities, the greater the difficulty in consumer acceptance. However, when the biometric application is almost entirely for personal gain and with little security risk, the greater the consumer acceptance.
Applying this (admittedly rather simple) rubric, let’s look at Apple Watch and Apple Pay.
Apple Watch should have high consumer acceptance. The Watch has high value and low risk. The Apple Watch uses a personal heartbeat and other factors to create a highly unique fitness profile using biometric readings that actually informs individuals of their own true training level and fitness beyond what any fitness training apps do today. That’s potentially perceived as a huge value. Beyond that, there are little to no risk factors: the Watch’s biometric applications are purely personal, voluntary, not required to be shared, and would have little to no value to government. Apple Watch is an innovation with the capability to move a consumer acceptance of biometrics to a whole new level.
Much more tricky for Apple to launch is Apple Pay, which may see a mediocre acceptance rate. No matter how described, Pay has lower value and potentially high risk.
Apple Pay requires retailers to sign up, so it cannot be used everywhere. While great that Apple does not intend to make money on transactions, that means little to consumers who would not feel the direct brunt of a fee anyway. Plus, Pay does not keep credit card information fully secure from retailers as some of the other biometric digital wallets emerging do. Each of these elements lowers value to consumers.
Moreover, Pay represents potential risk different but not dissimilar to credit cards now which, once hacked, connect to our personal identity data: once the biometric is used, Pay assures that our phones – and potentially anything on it – is involuntarily interfacing with an unknown web of payment systems, credit cards and retailers. It is that uncontrolled connectivity between personal biometrics and the outside world that is – literally – at our fingertips, that will continue to draw a dubious reaction from consumers. Assuring people about how the biometric information and payment information on smart phones are protected once it interfaces with a retailer in the Pay environment is the learning curve Apple must overcome. Whether Pay is evolved enough or not, and whether the public finds sufficient value in a phone replacing a pile of credit cards, remains to be seen.
No matter what, the acceptance of Apple Pay will likely have less to do with the biometric features than with overall concerns about payment security and privacy.
Unfortunately for biometrics in the commercial space, concerns about data breaches bleed over to concerns about biometric and identity breaches. The biometric industry needs to proactively address data breach concerns upfront or risk consumer nonchalance, or even rejection, of core biometric features upon which the industry hopes to thrive.
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