PayPal is eBay's (NASDAQ:EBAY) growth star these days. Total payments volume was up 21% last quarter, with revenue jumping 18%. In dollar terms, that's still less than the core marketplace business, but it's growing much faster. With that rising payments volume comes increasing responsibility over account security, particularly since payments are quickly shifting toward mobile platforms.
To that end, PayPal is hoping that Apple (NASDAQ:AAPL) will play a part in bolstering its security. PayPal wants Apple's help in killing all security passwords.
Rest in peace
Nowadays, a short string of alphanumeric characters interspersed with exclamation points and ampersands is all it takes for unscrupulous types to get access to all your digits. There have been a string of high-profile security breaches in recent memory. Wired's Mat Honan had his digital life erased in just one hour, in part due to password security flaws at Apple and Amazon.com that allowed a hacker to remotely wipe all of his gadgets. Honan is now advocating killing the password, arguing that short strings of characters can't cut it anymore.
PayPal's chief information security officer, Michael Barrett, concurs, outlining the death of the password at the recent Interop IT conference in Vegas, according to CIO. Barrett notes, "Passwords, when used ubiquitously everywhere at Internet scale are starting to fail us."
Since many users tend to lazily reuse the same password for a wide range of accounts, one security compromise can lead to a domino effect whereby a person's security is effectively downgraded to the lowest common denominator: "That has the effect of reducing the security of their most secure account to the security of the least secure place they visit on the Internet."
Barrett is also the president of the Fast IDentity Online, or FIDO, alliance, which was formed last summer and hopes to set new open security standards by developing and promoting alternative authentication methods that can be widely adopted.
Where does Apple come in? Barrett suggested that the iPhone maker would adopt FIDO protocols, which could do wonders in catalyzing the industry forward:
It's widely rumored that a large technology provider in Cupertino, Calif., will come out with a phone later this year that has a fingerprint reader on it. There is going to be a fingerprint enabled phone on the market later this year. Not just one, multiple.
Apple is certainly integrating a fingerprint sensor into future iPhones to know who you are, leveraging the AuthenTec acquisition from last year. Combined with some type of mobile payments solution (which would inevitably compete directly with PayPal), killing the password could be Apple's killer feature of 2013.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, and eBay. The Motley Fool owns shares of Amazon.com, Apple, and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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