Mobile Commerce Daily is now Retail Dive: Mobile Commerce! Click here to learn more!

Samsung, PayPal tap fingerprint technology in smartwatch response to Apple

A Samsung-PayPal smartwatch under development with mobile payment fingerprint-identification technology would increase the ability to simplify payment authentication on a device with limited space for a long PIN or password.

The fingerprint technology provided by Synaptics will be included in Samsung’s third-generation smartwatch to be released early next year, Business Korea reported, quoting an unnamed Samsung executive. The partnership shows how with both Apple and Samsung integrating fingerprint scanning onto devices, options for simplified payment authentication are increasing, regardless of the device.

“Samsung announced a partnership with PayPal with the introduction of the Galaxy S 5 in February 2014,” said Chris Donohue, of public-relations firm MWW. “The smartphone’s built-in fingerprint sensor enables users to quickly sign into PayPal and easily make secure mobile payments.”

“Galaxy S 5 users can quickly sign into PayPal and easily make secure mobile payments with a quick touch using the fingerprint sensor,” he said. “Partnering with PayPal for secure mobile payments was important because they are a leader in the space with a large user footprint and a trusted consumer experience for a secure payment process.”

Biometric sensors
The watch would allow payment to be authorized immediately when users identify themselves through biometric sensors such as a fingerprint or login.

“Quickly accessing PayPal through the Galaxy S 5 fingerprint sensor will enable consumers to easily and securely make mobile payments,” Mr. Donohue said.

Two weeks ago, ending months of speculation, Apple unveiled its Apple Watch, which includes fitness-tracker features and the ability to receive calls when linked to an iPhone, among other applications.

Given Apple’s sheer brand-name impact, the announcement excited marketers.

As euphoria over the initial announcement wears off, however, focus is on the challenges Apple will face in winning acceptance for its smartwatch. For one thing, the Cupertino, CA-based maker of the iPhone and iPad is entering the smartwatch and wearable market late, jostling for position along with such established names as Samsung, Sony and Motorola.

Samsung already has several smartwatches on the market. However, Samsung needs PayPal to keep consumers engaged with its smartphone hardware. PayPal needs help to maintain a strong presence in the face of Apple’s newly unveiled mobile payments system, Apple Pay.

Launching a smartwatch by early next year would help Samsung and PayPal steal more of Apple’s thunder.

In April, when Apple was easing its way into fingerprinting, PayPal went in big with the form of payment technology.

PayPal has debuted its smart watch app for Samsung’s Gear Fit and Gear 2 watches with fingerprinting technology that cuts down the number of steps required to buy something. The app is the newest example of how the eBay-owned company is moving beyond smartphones and tablets to keep the momentum around mobile payments going.

PayPal’s smart watch ambitions were originally announced in February with the planned launch of the smart watch app.

Now, the app is live in a number of markets, including the United States, Germany, Hong Kong, Mexico, Britain, Brazil, Canada and Australia.

The app lets consumers check-in at stores, save offers and checkout by swiping a finger across the screen. The swipe logs a consumer into their PayPal account that is linked to a credit card.

Additionally, consumers can receive person-to-person payments via the smart watch app.

PayPal cites a sponsored study with the National Cyber Security Alliance to rationalize its move to fingerprinting. According to the study, 53 percent of Americans are comfortable swapping out a traditional password for a fingerprint authentication.

PayPal’s parent company, eBay, also has tested a commerce-enabled app for Samsung Galaxy Gear devices.

At the same time, both companies are also embracing other types of new technology to improve the retail experience, including shoppable pieces of glass and digital kiosks at retailers such as Kate Spade, Rebecca Minkhoff and Sony.

Apple’s launch of iOS7 last year with fingerprinting technology made a big splash in the industry as a possible indication of the manufacturing giant’s mobile commerce plans.

However, Apple appears to be taking its fingerprinting initiatives slowly and has not opened up fingerprinting scanning for third-party apps yet.

Convincing customers
Both Samsung and PayPal are known for jumping into innovation faster than Apple, but it remains to be seen how receptive consumers will be towards paying for items via their smart watch.

At the same time, the trend towards streamlining mobile payments shows no sign of slowing down.

“Wearable devices present a number of opportunities to augment the mobile experience, and biometric authentication is well-position to be a part of that story,” said Ryan Martin, analyst, Internet of Things and wearable technologies, for Boston-based Yankee Group.

“This is especially true when it comes to payments. To date, Samsung’s wearable tech strategy has been driven by an iterative R&D process that has allowed it to play in both new and existing product categories – and the company’s upcoming device, the Gear S (3G), is just one example of its drive to remove the governor on wearable tech innovations.

“Leveraging the secure elements that come with this new flavor of mobile devices, being wearables, is a logical step not just for OEMs, but for the mobile economy as a whole,” Mr. Martin said. “The involvement of companies like Apple and Samsung, however, will be significant growth drivers of such a vision.”

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York.