Handwave has raised $4.2 million to bring its biometric tech into stores. The startup’s contactless system allows shoppers to leave their phones and wallets in purses and pockets, enabling them to pay, verify their identity, and collect loyalty points simply their palm.
By and large, the company is betting that its palm-scanning tech can eliminate checkout friction.
Palm payments have been around for some time, with the most notable implementation being Amazon One, the biometrics system introduced by Amazon and rolled out in more than 500 Whole Foods stores, as well as other locations. While Amazon’s push has made an impact, the biometric authentication landscape remains fragmented.
“There’s no question we’ve seem a surge in biometrics payments technology in the last 18 months,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Handwave is following Amazon’s lead with palm recognition, in contrast to JPMorgan Payments in the U.S. and Facepay in South Korea who are deploying facial recognition technology for payments.”
A Leading Contender
Initially, palm scanning was not a leading contender to become the biometric of choice, largely due to consumers’ familiarity with fingerprint and facial scans via mobile phones. However, there’s growing evidence that palm biometrics are gaining traction.
Palm scans are highly accurate and, unlike fingerprint scans, they don’t require users to touch the scanner. They are also gaining ground outside of Amazon. China’s tech giant Tencent has led several recent palm payment initiatives, and Poland’s Autopay has piloted its HandGo palm payment system.
Piloting Amid Challenges
There are still many obstacles to bringing biometric payments to brick-and-mortar stores. One of the main challenges is the cost of installing and maintaining scanning equipment at checkout. To mitigate this, Handwave is leveraging a different model to keep transaction costs down.
“Handwave is incorporating pay-by-bank enrollment, enabling them to offer a lower cost of payments to merchants as an incentive to deploy the technology,” Apgar said.
In this model, merchants would pay a transaction fee when they use Handwave’s tech, which the company touts as being lower than the typical transaction fee.
Beyond cost, another challenge with biometric systems is the need for additional consumer buy-in. Consumers must enroll with the merchant or the system and be willing to trust their data to these platforms.
All of these issues help explain why there are a rapidly increasing number of biometric pilots but few large-scale implementations.
This is also applies to Handwave. After three years, the fintech is preparing for market pilots that will deploy its palm-scanning devices at retail stores. It remains to be seen whether the company can gain traction among competing players and biometric formats.
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