Fingerprint security technology has the potential to take mobile payments mainstream, according to Barclays analyst Ben Reitzes. Many have speculated about Apple’s purchase of AuthenTec and how it may be centered around secure mobile payment-related intellectual property (IP), and Mr. Reitzes told clients on Tuesday that Apple might be planning to use the technology in the iPhone two generations from now in 2013.
In a research note obtained by The Mac Observer, Mr. Reitzes noted that AuthenTec announced new fingerprint sensors capable of providing fingerprint authentication on smartphones and tablets. Apple bought AuthenTec on Friday for US$350 million, and the analyst believes Apple will use the firm’s IP to provide near field communications (NFC) mobile payments on its iOS devices.
“We feel owning the patents around these solutions should help Apple seamlessly integrate the technology into its device hardware, iOS and an iTunes back-end and get ahead of the competition,” Mr. Reitzes wrote. “We also envision secure identification with NFC helping drive iPhone usage as a marketing/coupon tool when at stores, a home remote control for appliances and a host of other 3rd party applications.”
Mr. Reitzes also approached the buyout from the standpoint of Apple’s desire to control key technologies in its solutions when the company enters a new market.
“Apple may have looked at AuthenTec and said ‘all payments and identification can be made this way,’” the analyst wrote. “Apple typically incorporates technology that backs principles in common sense and ease of use that can appeal to a mass market.”
That counts as one of the most astute pieces of analysis we have seen when it comes to Apple, and it’s a very succinct way to describe Apple’s approach to the market.
Mr. Reitzes believes that a secure fingerprint-based mobile payment system would allow Apple to take the concept out of the realm of geeks and into the mainstream because it would appeal to “millions, if not billions more potential users.”
Shares in AAPL have been on rally since the AuthenTec purchase was revealed on Friday. The stock ended the day higher on Tuesday at $610.76, up $15.73 (+2.64 percent), on moderate volume of 16.3 million shares trading hands.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.