Apple Pay Biometrics Voice Recognition

How pumpkin spice lattes are evolving payment technology


By Lisa Lacy, n/a

October 8, 2016 | 12 min read

Perhaps the best example of the potential for digital payment technology is young Sam Crowder’s ESPN College Game Day sign — “Hi Mom! Send Beer Money” — which included his ID for digital wallet Venmo and, as a result, netted payments from more than 3,000 strangers.

And while Crowder achieved his primary objective and his beer fridge is presumably stocked, he also unwittingly demonstrated the likelihood we will eventually live in a cash- and card-less society.

At the same time — and even though Venmo is just one of many digital payment options — a 2015 survey from professional services company Accenture found consumers still use traditional payment methods most frequently, with 67 per cent of respondents saying they use cash most often, followed by 59 per cent with debit cards and 50 per cent with credit cards.

And while awareness of digital payment options is at an all-time high, Accenture nevertheless found only 18 per cent of consumers in North America make mobile payments regularly, which is up only slightly from 17 per cent in the prior year. And, perhaps not surprisingly, high-income respondents (38 per cent) and Millennials (23 per cent) were most likely to use digital payment options, Accenture said.

Of these options, consumers most commonly use PayPal (16 per cent) and retail mobile payment apps (14 per cent), Accenture added.

How to convince consumers to use digital payments without even trying

Start by making it easy.

Further, Accenture found mobile payment and digital wallet service Apple Pay accounts for 68 per cent of in-store mobile phone payments in the US, which it says is in part because Apple Pay is easy.

Similarly, a 2015 Federal Reserve study found the primary reason consumers do not use mobile payments is a belief it is easier to pay with cash or cards (75 per cent).

In fact, Jason Snyder, CTO of brand experience agency Momentum Worldwide, said encouraging consumers to use digital payment options means reducing friction as much as possible — and overcoming this mental barrier, which also includes a cognitive dissonance between paying for physical goods with mobile devices and paying for synthetic goods within, say, Candy Crush Saga.

For his part, Dan Bennett, chief digital officer of advertising agency McCann North America, said the market is at an inflection point at which devices are more user-friendly and more retailers are accepting mobile payments, which means infrastructure is in place and it’s now all about seamlessly connecting shopping and payment experiences.

Further, Bennett said mobile payment services and digital wallets — which, in addition to Apple Pay and Venmo, include Google Pay and Samsung Pay — mark the first forays into using digital experiences to pay for goods and services and once we reach the tipping point, there “will be a tidal wave of comfort when it comes to dealing with whatever digital payment opportunities come next, whether it’s voice recognition or fingerprint technology…once that tipping point happens and consumers are used to paying with mobile wallets, they’ll be up for anything.”

Snyder agreed tap-and-go technology with two-factor authentication, whether by card or phone, is easiest in the short term even if some friction remains. And this will likely be the gateway to a cash- and card-less world.

“[Consumers] should be able to pay for anything with anything,” he said. “It’s that simple. It’s not my problem. If you want to sell me something, that’s your problem. My only problem is affording it — and that’s a separate conversation. So…the format and form factor — Apple, Samsung, Google, Amex, MasterCard, PayPal, Bitcoin — is irrelevant.”

And the market is close to that aforementioned tipping point, Bennett said.

“There just needs to be more incentive to push into the environment,” he added.

Ease of use is certainly a goal at financial services company MasterCard as James Anderson, executive vice president for digital payments, said, “Ultimately we’re trying to answer the question of how to make [the] consumer’s life better.”

That includes in-app payments via digital wallet MasterPass, as well as wearables, including clothing, car keys and fitness bands, or wherever MasterCard could potentially turn items from consumers’ everyday lives into commerce devices, including home appliances, Anderson added.

Throwing in a little value doesn’t hurt either.

But rewards for using digital payments are also a strong motivator.

In fact, Accenture found 79 per cent of users would make more mobile payments if offered discount pricing and/or coupons based on past purchase behaviors and an additional 78 per cent would increase usage if they received rewards points. As a result, this means providers have an opportunity to extend their value propositions via efforts like rewards, which, in turn, can speed the adoption of mobile payments, Accenture said.

“When we go back to retailers about how to add value at the point of sale, I will often [note I’ve tried] to pay for cab rides using my mobile wallet on my iPhone and I never [knew] going into that whether it [would] work or not. Sometimes it [did] and sometimes it [didn’t], but because there’s no broader incentive to try to use it, I stopped trying in that particular instance,” Bennett said. “If, for example, the [New York] Taxi and Limousine Commission placed some incentive to pay that way – and god knows, they need to do anything to battle Uber – I would use it more frequently because of the inherent value and I really feel like that added value piece is kind of important and kind of interesting.”

Shiva Vannavada, CTO at digital marketing agency iCrossing, too, noted cash and credit cards continue to dominate in part because the market lacks consumer experiences that provide value.

“My guess is companies that gameify it are ones that win, [like giving] gold stars for spending more money,” Synder added.

Perhaps we can all learn a little something from Starbucks…

Speaking of stars, Starbucks is perhaps the gold standard when it comes to brands encouraging digital payments via rewards. Starbucks has found a way to add value beyond just scanning a reader with a phone in its Starbucks Rewards program, Bennett said.

“Starbucks [has] done a brilliant job with [its] rewards scheme being tied to the app. I get rewarded for using it and something like 22 per cent of in-store sales are done through mobile. That’s pretty significant, I think,” Bennett added. “Because [it has] added a level of value beyond it being on a mobile device, I think one of the interesting elements for us as marketers is to help to add value.”

Walmart, too, has its own payment service, Walmart Pay, a feature built into the Walmart app that allows consumers to use smartphones to make in-store purchases, which Snyder said is a “very good litmus [test] of what adoption could be and the power brands have.”

And it may make sense for other brands to follow suit in part because payments will drive consumption – and they also provide customer transaction data, enabling brands to provide offers, relevant deals and coupons and that, in turn, will influence purchasing decisions, Snyder said.

In addition, Snyder noted Starbucks is not a bank, but it has billions of dollars of stored value on its books at any given moment and it is not federally regulated, which means this money is not insured.

“The other interesting part of it is you can buy other things, like music and coffee machines and I can transfer [money to other customers, so] I can do commerce,” Snyder said. “It’s not a bank, but that’s okay with everyone and everyone trusts it and if tomorrow Starbucks decides to stop selling coffee, you’re out of luck.”

And that could spell trouble for banks, Snyder added.

“People like pumpkin spice lattes more than banks,” he said. “Banks doing bank things properly is not interesting for consumers. Making a pumpkin spice latte properly – well, that’s the important stuff. So of course people will give Starbucks money.”

How secure is this, really?

And while consumers don’t really seem phased by the possibility they could lose the $1.2 billion they have stored on Starbucks cards, security is certainly a concern when it comes to the use of digital payments overall.

“In general, people gravitate toward something that delivers a high level of convenience,” Anderson said. “But when you’re dealing with money, people recognize that there are competing demands and they don’t want someone else to be able to spend their money and so some degree of friction of appropriate.”

Indeed, the Federal Reserve said concerns about security were a common reason given for not using mobile banking or mobile payments (62 per cent and 59 per cent, respectively, among non-users).

But even though consumers may feel less secure when it comes to digital payment options, Bennett pointed out the security on the backend is the same whether consumers are paying with phones or cards and so there is still some communication that needs to happen to ease consumers’ minds.

Biometrics, FTW

Enhanced authentication methods might be one way to do that.

For example, Anderson said a popular innovation as of late has been the use of biometrics like fingerprints instead of PINs.

“It’s hard to forget your fingerprint,” Anderson said. “And with the technology available on devices consumers have in their possession, this is a secure solution. It’s hard to fake a fingerprint, so this is the right balance between using technology with a level of control and as little friction as possible…that’s why I think biometrics become immediately so popular — because [they deliver] control without sacrifice.”

But fingerprints may be the tip of the proverbial iceberg.

MasterCard also announced MasterCard Identity Check last year, a digital authentication method that allows consumers to verify transactions with their faces as well — and has since become known as "Selfie Pay", Anderson said.

In a blog post, MasterCard said it is testing a range of additional authentication methods, including voice recognition and cardiac rhythm through a wearable wristband.

In the end, Anderson said the appropriate biometric will naturally gravitate to the right use case.

“If I’m tapping with my phone in-store to buy coffee, I’m comfortable with the idea there’s no authentication because the risk is small or maybe that I do a fingerprint on my phone because that’s what the system asks me to do,” Anderson said. “If I’m asked to do facial recognition in the Starbucks line, I might feel self conscious…but if I’m in my home and on the big screen where no one is around, this is a perfectly natural thing and fine.”

Similarly, Anderson said voice authentication is great unless there is background noise, in which case fingerprint authentication might work better.

“Those technologies will gravitate to the use cases that make the most sense,” Anderson added.

Facial recognition and beyond

“I think the future and opportunity…is for the passive experience – I walk into things and you know my face,” Snyder said. “With facial recognition technology, I cannot understate how important and good [it is]. It can track you literally everywhere.”

For his part, Bennett pointed to conversational commerce and the ability to ask Alexa to buy whatever you need as a related evolution in payments and commerce.

“It recognizes my voice and I have authorized it as a sales channel in my home, but there is a downside, such as when I realized my four-year-old used it to order stickers with her name on them,” Bennett said.

In the end, Snyder said whoever is closest to the consumer controls the conversation.

“If Amazon is closest through a Dash button, auto replenishment, built-in as AI in my [washing] machine or pervasive in my life as Alexa, then it gets my order,” he said. “Again, quality, logistics and dependable delivery [are] table stakes. And until we have better AI working for consumers…we still have to burn calories looking for bargains, but soon there will be AI to manage those transactions on our behalf…the last century in advertising and marketing was about persuading people. The next 100 years will be about machines persuading machines. It’s the AI that will be closest to consumers.”

Apple Pay Biometrics Voice Recognition

More from Apple Pay

View all


Industry insights

View all
Add your own content +