Apple (NASDAQ:AAPL) wasn't the first company to offer a smartphone with a fingerprint scanner, but it seems to have ignited a trend. Following the debut of the iPhone 5s, Apple's rivals -- HTC and Samsung (NASDAQOTH:SSNLF) -- have chosen to include the technology in some of their flagship models.
Like Apple's iPhone 5s, Samsung's latest phone, the Galaxy S5, features a fingerprint scanner built into the home button. Unfortunately for buyers, reviewers have almost universally trashed the feature, concluding that it's basically worthless. While that could damage Samsung's reputation, the company that could suffer the most is eBay (NASDAQ:EBAY).
A useless feature
With S5 finally available for purchase, most of the traditional tech outlets are out with reviews of Samsung's latest flagship. While the final scores differ, almost all of them agree on one thing: When it comes to the fingerprint scanner, Samsung blew it.
Writing for The Verge, David Pierce said that while the fingerprint scanner did work, it was fickle, and that he would "never actually use the S5's fingerprint security." Re/code's Walt Mossberg was even more critical, saying that in his tests, the S5's fingerprint sensor failed "most of the time." CNet listed it as one of the S5's weaknesses, and offered up a four-paragraph tutorial on how to best to utilize the feature.
Like many of the features Samsung includes in its phones, this is one that will likely be ignored. Samsung's previous flagship, the Galaxy S4, included half a dozen features (like eye tracking and Air View) that were almost universally panned. Still, the phone sold well -- perhaps not as well as Apple's iPhone 5s, but better than its other Android-powered rivals. A bad implementation could sour some Samsung buyers, but most will probably shut the feature off and never use it again.
The true potential of mobile biometrics
That's unfortunate for eBay shareholders. A properly implemented fingerprint sensor might've scored Samsung some points against Apple, but the long-term potential of the technology appears to be from the services it enables rather than the feature itself.
In this case, that's mobile payments, and more specifically, eBay's mobile payment solution via PayPal. Samsung's Galaxy S5 interfaces with eBay's PayPal app, allowing S5 owners to pay for things using their PayPal account. There are other mobile wallet alternatives, but only PayPal's works with Samsung's fingerprint sensor (at least for the time being). Had the fingerprint sensor been favorably received, some Galaxy S5 owners may have adopted eBay's solution, particularly because the PayPal apps comes preinstalled.
So far, no company has found much success in mobile payments -- breaking into that market might require a number of thus far unknown innovations. But many analysts see biometrics as a necessary component, allowing smartphones to offer up a level of security traditional payment solutions can't match.
Piper Jaffray's Gene Munster, for example, predicted the debut of Apple's Touch ID last year, but argued that it was only laying the groundwork for something much bigger. By leveraging the hundreds of millions of credit cards Apple has on file, it could use Touch ID to offer up a secure mobile payment solution -- eventually, your iPhone could replace your wallet.
eBay's blown opportunity
eBay also has millions of credit cards on file and 110 million active PayPal accounts. Mobile payments aren't a big part of eBay's business today, but PayPal's potential in the space was enough to attract activist investor Carl Icahn, who earlier this year argued for a PayPal spinoff on the grounds that eBay's division would quickly be acquired by a larger company (perhaps Samsung?).
eBay's management argued that PayPal should remain with the company, and has been rolling out mobile payment solutions (like a PIN-based system) that don't directly require the use of a smartphone.
To be clear, Samsung's failure to offer up a fingerprint sensor on the level of Apple's won't doom eBay by any means. But had it been successful, eBay would've been in a terrific position to capitalize on the mobile payment revolution.