The new iPhone: the dawn of biometric?

Guest blog post by Sascha Breite, head of future payments, SIX Payment Services

Even by Apple’s usual standards, it’s been a big couple of weeks. The release of new software update iOS 7 and the much-anticipated launch of the new iPhone have combined to create a greater-than-normal buzz around the brand. Add to this the recent Interbrand list, naming Apple above Google or Coca Cola as the highest valued global brand, and it’s easy to understand why the launch of the new iPhone has created waves beyond the mobile handset industry.

This is particularly true of the payments industry, where mobile payments continue to dominate the discussion. This is a space which is currently experiencing significant flux – from PayPal to PingIt, Znap to Zapp, iZettle to Intuit, it seems as if everyone wants in on the mobile payments action. The only remaining barrier, it would appear, is consumer trust in mobile payment products.

This is precisely why any change to the UK’s most popular handset – the iPhone 5 has been Britain’s number one handset for seven consecutive months – will be taken seriously by payments professionals. Take, for example, the decision by Apple to not include Near Field Communication (NFC) technology in the new model. A number of commentators have chosen to see this as flat-out dismissal of NFC, suggesting this signifies the end of the road for contactless payments. And while it is true that without Apple backing NFC technology will struggle to reach mass market, I am not convinced by this argument. There are a number of popular Google products – Google Maps, iOS Passbook, to name a couple – that would greatly benefit from in-built NFC technology. Apple will join the NFC market, but only when they see fit to do so.

The far more interesting development, in my opinion, is the inclusion of biometrics in the iPhone 5s. The fingerprint identification technology removes the need for a passcode to unlock the screen, and consequently paves the way for mainstream consumer familiarisation with biometrics. In other words, the iPhone 5s may well do globally for biometrics, what the Oyster card has done for contactless in London. And if we bear in mind the current consumer distrust of mobile payment technology, the significance of this becomes all the clearer.

Biometrics are certainly a secure method of identification, reducing consumer security concerns around new technology. Apple is placing the chances of a random unregistered fingerprint unlocking an iPhone at 1 in 50,000, a significant five times better than the four-digit PIN currently used. What’s more, it’s a great way for consumers to engage with new identification technology – and after all, isn’t half the mobile payment battle to do with identification anyway?

While Apple’s developments may not necessarily illustrate an obvious interest in the payments market, it is clear that these changes will have far reaching impacts – most notably on consumer attitudes towards biometric identification. But that isn’t to say Apple has closed the door on NFC. Watch this space, for there is sure to be more.