Amazon accounts for nearly 40 percent of e-commerce sales in the US today, and it takes a cut of even more online shopping by selling payments services and other technologies to external shopping sites. Now, the online retail giant is making a play to grab a piece of brick-and-mortar shopping, too — and it wants customers to literally lend a hand to do it.
Amazon on Wednesday is unveiling a new way to pay at select Whole Foods stores: a biometric technology called Amazon One that allows shoppers to pay by placing their palm over a scanning device when they check out. The new technology is now available at the grocery chain’s Madison Broadway store in Seattle, Washington. Seven more Whole Foods locations in the Seattle area will offer the payment option in the coming months.
The first time they register to use this tech, a customer will scan their palm and insert their payment card at a terminal; after that, they can simply pay with their hand. The hand-scanning tech isn’t just for Amazon’s own stores — the company hopes to sell it to other retailers, including competitors.
Amazon first introduced the technology in September at some of the company’s Amazon Go cashierless convenience stores in Seattle. The company had added the tech to a total of 12 stores in the Seattle area before today’s Whole Foods announcement. Recode first reported in December 2019 that Amazon had filed a patent application for such a hand-payment technology.
In September, Amazon executive Dilip Kumar told Recode that the company expects to sell the technology to other retailers, like it began doing earlier this year with its “Just Walk Out” technology — the cocktail of cameras, sensors, and computer vision software that powers Amazon Go stores. Kumar said the Amazon One pitch to other retailers is straightforward: reduce friction for your customers at checkout, thereby shortening lines and increasing how many shoppers are served along the way. The company said in a blog post on Wednesday that it was in discussions with other retailers, but did not yet have any partnerships to announce.
Amazon’s plan to license these two homegrown technologies to other retailers, whether competitor or not, is the real story: Amazon isn’t satisfied with e-commerce dominance; it wants to earn a cut of more transactions in the physical retail world, where 80-something percent of commerce still takes place in the US. So it’s building out a futuristic suite of services to court other retailers, while showcasing the technology in its own stores as case studies.
One obvious question is whether retailers, many of which consider Amazon a competitor of one sort or another, will want to do business with the tech giant. Kumar pointed to Amazon Web Services, the company’s $40 billion division that leases computing power, data storage, and myriad software capabilities to internet companies big and small, as an example of an Amazon offering that attracts competitors.
Amazon will collect data on where Amazon One customers shop when they use the payment option, but it will not know what shoppers purchase or how much they spend inside third-party retail stores. An Amazon spokesperson said the company has “no plans to use transaction information from third-party locations for Amazon advertising or other purposes,” and shoppers can sign up for the service without linking it to an Amazon customer account if they choose.
Another question is whether enough people will be willing to hand over scans of their hands to Amazon in order to save a bit of time at checkout. It’s true that a no-touch payment method might be more attractive today, during the Covid-19 pandemic, than even a year ago. But new payment methods often face steep adoption challenges, and that’s even when biometrics aren’t involved. Biometric tracking poses a host of privacy concerns, including the potential of targeted hacking or a mass data breach.
Kumar, the Amazon executive, said the more locations where Amazon can introduce the technology, the more valuable customers will find it and be willing to give it a try. That’s why the company plans to pitch other use cases beyond payments. Kumar also said Amazon is discussing with potential partners the idea of linking palm scans with building IDs to replace office ID cards, or with event tickets for stadiums or arenas.
The executive added that Amazon chose palm scans over other biometric options for a few reasons. One, he said, is that it’s not easy for a bad actor to identify a person by simply viewing an image of their hand, if that material ever leaked. Another is the uniqueness of each person’s hand. “Even identical twins have many differences in their palm structure,” he said. A spokesperson added that the images are encrypted when scanned, and then “sent to a highly secure area we custom-built in the cloud for analysis and storage.”
To some, the upside still won’t be worth it. “How lazy are people that they will hand over their handprints so they don’t have to take out their wallet?” my wife asked when I mentioned the new technology to her in an embargoed dinner-table discussion. But Apple’s Touch ID fingerprint-scanning tech and its Face ID face-scanning tech also seemed a little crazy at first — until they weren’t.
And if enough customers trust Amazon with the trade-off, physical retailers will face an interesting dilemma: chase the future by aligning with the most powerful tech company in retail, or stick to the present and hope their customers don't stray as a result.
Update, April 21, 2021: This article has been updated to report that Amazon plans to introduce its pay-by-hand technology in select Whole Foods stores.