Best New Ideas in Money: Silicon Valley’s final frontier for payments: ‘The neoliberal takeover of the human body’
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 technology is infiltrating every other aspect of our digital lives. Next stop: replacing your wallet.
Biometric mobile wallets — payment technologies using our faces, fingerprints or retinas — already exist. Notable technology companies including Apple
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.
The number of purchases increased by 24% 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
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
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.”
Apple and Samsung have sold tens of millions of devices with fingerprint scanning technology.
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 to 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.
Consumer advocates are also worried about biometric technology being used for commercial purposes.
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?”
Facial recognition, fingerprint and reitna scanning could leave people exposed to a life of ‘digital redlining.’
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
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.’”