Why Hands-Free Pay Isn’t Taking Off

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Yesterday, Google announced the limited rollout of a new hands-free payment system that makes Apple Pay look primitive. Hands Free, which will be piloted in the Bay Area at Papa John's, McDonald's, and other restaurants, lets users pay with nothing more than their voice, and their face. Announce that you'd like to pay with Google, let a camera verify your face, and get on with your day.

Sounds like science fiction, right? But like the best sci-fi, Hands Free is equal parts enticing and unnerving. It turns personal finance into a voice-activated command, and brings an unprecedented level of convenience to transactions. It also raises yet more concerns about privacy in an increasingly connected, camera-filled and Google-dominated world. The company says that facial-recognition images will be deleted after they're used for verification. But facial analysis is already being used to collect aggregate data on consumers — detecting the age, gender, and apparent mood of subjects, without actually storing their images or attempting to identify them. In other words, consumers who aren't using Hands Free may still be part of an ongoing effort to turn their faces into yet more data to be mined and resold to third parties. And the only way to opt-out of this kind of persistent facial analysis is to make like an incognito celebrity, and throw on a hat and a pair of sunglasses.

There's good news, though, for the camera-shy. If Hands Free follows the same trajectory as similar payment systems, it might never become ubiquitous. Look at Apple Pay, the most high-profile hands-free payment service to date. In a survey released last month, while 84 percent of iPhone 6 users had heard of Apple Pay, only 20 percent had paid for anything with it, and 15 percent had used it more than once a month. Those numbers are down from First Annapolis Consulting's spring 2015 survey, when 22 percent had tried Apple Pay (and 19 percent had used it more than once a month). After crunching the numbers, including the iPhone's market share among cellphone owners in the United States, First Annapolis concluded that "the typical financial institution can expect 1 to 2 percent of cardholders to use Apple Pay two or more times."

Far from disrupting the way we make transactions, Apple Pay remains an unofficial pilot program some 16 months after it was launched. And despite some impressive numbers overseas, such as the 3 million cards activated with the service by Chinese users during its first two days of availability in that country, interest and awareness doesn't equal adoption. The numbers related to the proportion of actual Apple Pay transactions are trending flat, or down. In a survey conducted in March 2015, 5.9 percent of respondents said they'd used Apple Pay for a given transaction. In October 2015, that number had slid to 5.1 percent. And among respondents who didn't use Apple Pay for a transaction, 30 percent said they weren't sure that the store accepted it. That hesitation could diminish as more businesses accept Apple Pay. More troubling for the near future of hands-free payment is the 30 percent who reported not using it because they forgot.

The future of payment is essentially here, and the public simply doesn't care. Apple Pay is something people should be excited about, particularly when it comes to the increased security that comes with using a fingerprint instead of a password, and its potential to end card-skimming and point-of-sale data breaches (it sidesteps fake card scanners, and doesn't leave reusable financial data behind). Google's Hands Free system is cooler still, provided its facial-recognition algorithms can prove more reliable than speech-recognition. Think about all the times that Apple or Google have misheard a command spoken into your phone. Now move that experience to a crowded store, and a long line at the register. Even a single failed facial-recognition match, because of poor lighting, facial hair, or any number of algorithm-befuddling factors, will turn gee-whiz tech into a never-again option. The cerebral appeal of hands-free payment is a no-brainer. But the numbers don't lie. Unless companies like Google and Apple can come up with a better reason to go hands-free, paying with a phone, or a face, will remain the exception to the rule for years to come.