Apple’s Big Push Into Fingerprint Technology

We know Apple (AAPL) is releasing a new iPhone (or more likely, iPhones) on Sept. 10 — the invites have been sent. We’re also pretty sure that the new flagship iPhone is going to incorporate a fingerprint scanner. Leaked photos of the component have gone viral at this point and besides, it just makes sense.

When it has an incremental upgrade smartphone to release (one that looks just like last year’s model, only a little faster), the company likes to incorporate a unique feature to entice people to upgrade. With the iPhone 4S, that was Siri. Given the credible fingerprint sensor photos and Apple’s purchase last year of AuthenTec, there’s a good chance the technology will be this year’s killer iPhone feature.

Whether Apple is the one to introduce it or someone else, it’s only a matter of time before biometric security becomes a standard feature on smartphones.

Why would you need a fingerprint scanner instead of simply entering a passcode like you do today? Two reasons: The data accessible via your smartphone, and mobile payment.


At one time, cell phones stored the telephone numbers for the 10 people you called most frequently — and that was about it. Smartphones now store literally everything we once used a computer for. That contact information is a virtual Rolodex that might include physical addresses and email accounts. Chances are your credit card information is on your smartphone, photos of your family, maybe even a copy of your household budget.

And with the popularity of BYOD, that smartphone might be loaded with confidential documents. Besides what’s physically stored on the device, launching the web browser or email could offer a treasure trove of access to websites, online banking, corporate networks and private messages.

Consider how small a smartphone is and how easy it is to misplace or have stolen. If you’re like most people, access to the information it holds is a four-digit passcode away — at best. Given what’s on that smartphone and how easy it is for the device to end up in the wrong hands, a mere passcode seems woefully inadequate. Plus, memorizing PINs, passcodes and passwords, then remembering to update them has become a real pain.

Yes, there are advanced security options already available (for example, iPhone users can remotely wipe data or configure their device to erase the contents after 10 failed login attempts), but the average user doesn’t dive deeply enough to activate these options.

Apple is going to push the iPhone 5S and its fingerprint sensor as being the ultimate defense against unauthorized access — uncrackable and dead simple to use.

Mobile Payments

The idea of leaving your wallet behind and instead using your smartphone to pay for anything you need during the day is an appealing one. It’s tantalizingly close to realty, but has failed to take off in a big way.

It’s not for lack of trying. In fact, one of the big hurdles to overcome is the sheer number of technologies and players competing to become the standard. Retailers don’t want a dozen different terminals, readers and sensors cluttering the cash register to accommodate each of these methods.

The other problem is concerns about security. If your smartphone is stolen, what’s to prevent the thief from using it to rack up purchases before you can report it missing? That four-digit PIN? While the likelihood of someone stealing a smartphone, cracking the security code and going on a shopping spree before the owner shuts it down may seem slim, it is something that consumers worry about. A survey conducted earlier this years showed 52% of consumers have security concerns about mobile payments.

Eliminating the PIN and replacing it with biometric authentication — like fingerprint scanning — does increase security but perhaps more important, it increases consumer confidence about the security.

Apple is currently the biggest non-participant in mobile payments. Google (GOOG) has Google Wallet, Samsung (SSNLF) has Samsung Wallet, and virtually every credit card company, online payment business and wireless carrier has a horse in the game. But until someone takes a definitive leadership role, mobile payment is going to have a hard time ramping up to the $90 billion annual level it’s been predicted to hit by 2017.

Apple has taken steps toward mobile payment. It introduced EasyPay in 2011, allowing customers to self-checkout in Apple Stores. In 2012 came Passbook: digital storage for coupons, loyalty cards, event tickets and boarding passes. An iPhone 5S with a built-in fingerprint scanner could be the missing link needed for Apple to take the plunge into mobile payments.

And despite its shrinking market share in an Android-dominated smartphone world, what Apple does still carries weight. Its entry might be enough to shift some of those existing mobile payment alliances into its camp, gaining enough support to snowball into a standard.

In an era where valuable information is carried in your pocket, plastic credit cards and cash seem quaint and thieves have more tools than ever at their disposal, passwords and PINs seem completely outclassed — not to mention a pain to remember. Biometric sensors such as a fingerprint scanner look to be the wave of the future for smartphones and mobile payment.

Expect Apple to tout the iPhone 5S and its fingerprint scanner as a breakthrough product … and it may well help to kickstart mobile payment’s move to mainstream. And if Apple leads, you can bet others will follow.

As of this writing, Brad Moon did not own a position in any of the stocks named here.

Article printed from InvestorPlace Media,

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