Samsung (NASDAQOTH: SSNLF) unveiled its upcoming flagship Google (GOOGL 9.63%) Android-based smartphone, the Galaxy S5, earlier this week at the Mobile World Congress in Barcelona. The new device has a few small upgrades from its predecessor, most notably a fingerprint scanner supplied by Synaptics.
Despite obviously following Apple's (AAPL 0.38%) lead, by placing the scanner in the home button like the iPhone 5s, Samsung was able to do something Apple has yet to accomplish. It's partnering with eBay's (EBAY 1.09%) PayPal to let users pay for items online and in stores password-free.
The FIDO Alliance
The FIDO Alliance, which stands for Fast IDentity Online, is a consortium dedicated to secure authentication for online payments. Synaptics, PayPal, and Google are all members, and have focused on enabling secure mobile payments through unique identifiers. PayPal helped found the organization, and Synaptics joined when it bought Validity Sensors, another founder, last year.
The Synaptics fingerprint scanner on the Galaxy S5 uses the FIDO Alliance authentication standard. Additionally, Samsung will open the fingerprint scanner to developers, so apps like PayPal or Google Wallet can use it for authentication. Apple's TouchID scanner, conversely, is only able to authenticate apps approved by Apple. This is why Synaptics stands to gain, as more phone OEMs adopt fingerprint scanners.
Of course, there's nothing stopping Apple from joining the FIDO Alliance. Its technology could certainly be made to fit the standard quite easily. Such a move, however, might invite competition into a market the company appears very interested in entering.
Apple's m-commerce potential
Apple has more than 575 million iTunes accounts, each with a credit card on file. With hundreds of millions of iPhones in peoples' pockets, and the recent addition of a fingerprint scanner and iBeacon technology in the iPhone 5s, Apple has the groundwork for a payments solution.
PayPal has been very aggressive in this area. It released its own beacon last fall, well ahead of Apple's iBeacon rollout. Additionally, the company has partnered with several brick-and-mortar stores over the last couple years to use PayPal as a payment option. The company's solution has yet to truly catch on, though.
Apple, with its widespread popularity and control of iOS, could ease the friction that currently plagues PayPal mobile payments. But, Samsung is readily working with PayPal to help fix it. This move puts the pressure on Apple to roll out its own solution before PayPal builds a critical mass of users on mobile.
Don't count out Google
Google, too, has had its hand in e-payments for some time with its Google Wallet product. Considering its membership in the FIDO Alliance and its position with Android OS, the company could benefit from fingerprint scanners in more Android smartphones.
The company gained support from Visa and MasterCard last week, when the two credit card giants upgraded their mobile payments platform to take advantage of updates in Android 4.4. The new updates allow Google Wallet to work around carrier-controlled NFC identification.
Google's approach may face more roadblocks than PayPal's direct partnerships with stores, but it has the potential to reach a much broader audience more quickly. The adoption of fingerprint scanners by other Android manufacturers may prove key to further adoption of Google wallet.
It's time for Apple to get in the game
A dominant player has yet to emerge in mobile payments. The release of the S5 may give more credence to PayPal, or even Google, as the go-to mobile payments solution for consumers. The market is expanding rapidly, and Forrester Research expects $90 billion of mobile payments in 2017, a 48% annual growth rate. The market is there. The technology is there. Apple ought to roll out a payments solution soon, before Samsung and PayPal show it how it's done.
