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Apple Plans Fingerprint Based Mobile Payments; May Do Physical Goods

It looks like Apple is considering an expanded mobile payments strategy for its capacitive fingerprint sensor Touch ID, which was introduced last September as a feature on the iPhone 5s. The sensor currently allows users to scan their fingerprints to authenticate purchases from iTunes store, App Store and iBooks Store among others.

Apple CEO Tim Cook said during the company’s earnings conference call earlier in the day, that mobile payments is an area that they’ve “been intrigued with and was one of the thoughts behind Touch ID.” While he declined to disclose any specific information on this, he said “you can tell by looking at the demographics of our customers and the amount of commerce that goes through iOS devices versus the competition that it’s a big opportunity on the platform”.

This statement follows a source-based The Wall Street Journal report from last week which had suggested that Apple was laying groundwork for an expanded mobile payment service which includes facilitating payments of physical goods and services from its devices. Jennifer Bailey, VP (Online Stores) at Apple is apparently heading this business.

Earlier this month, Apple had also filed a patent for a touchless e-wallet, wherein it had detailed a method to establish a wireless and secure connection between a purchasing device to a point of sale device and then connecting to the back end to conduct a secure commercial transaction, as pointed out by an AppleInsider report.

If and when Apple launches its mobile payment service through Touch ID, it will be interesting to see how the service will affect other mobile payment services like eBay’s Paypal or Google Wallet or point of sale systems like Square. Remember that Apple probably has the largest active credit card base in the world right now, which stood at 575 million as of June 2013.

Launch In India? What’s not clear is whether Apple will be able to introduce this system in India. Like Google, Apple also uses a global payment gateway on which RBI has no jurisdiction, however Vineet Durani, Director, Windows Phone Business Group at Microsoft had told Medianama last October that Apple is sitting on a time bomb in India with iTunes payment gateway since Indian law insists on dual authentication and its possible that “someone will wake up one day and ask why there is no two-step authentication and possibly cut them off”. Note that Google hasn’t launched Wallet for mobile in India yet.

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Fingerprint authentication for third party developers? We are also curious to see if Apple figures out a way to provide the fingerprint reader authentication option to third party app developers, thereby facilitating an easier mobile payment system for users.

At launch, Apple had ruled it out probably to privacy concerns, however I have seen and heard several instances recently, where iPhone 5S users prefer the fingerprint authentication over the password authentication to purchase apps from the App Store since it’s much easier.

As I said earlier, Apple should provide an opt-in mechanism for third party developers to use this data, wherein consumers have the power to approve which apps get their biometric data and which apps don’t. Why rule off this authentication mechanism if the consumers are comfortable with it?

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