Tech giant plans terminals to let consumers link credit card information to their hands
AnnaMaria Andriotis | The Wall Street Journal | Source URL
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. AAPL 1.11% 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.
Amazon has discussed the project with card issuers. JPMorgan Chase & Co., Wells Fargo & Co. and Synchrony Financial have expressed interest in enabling consumers’ card accounts to work with these terminals, 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.