Biometric authentication may seem all the rage now that Apple uses fingerprint authentication in its mobile wallet, but the Bitcoin ATM provider RoboCoin has concluded that biometric technology can be more of a hassle than a help.
Las Vegas-based RoboCoin started accepting pre-orders for its bidirectional (cash-in/cash-out) Bitcoin ATM in August 2013. The company touted its machine as more secure than competitors, in part because users scan their palm veins with a built-in Fujitsu PalmSecure system. The process was futuristic, but too slow to sustain, so RoboCoin is eliminating the requirement to use biometric authentication.
"Launching with [biometrics] was cool, removing it was even better," said Jordan Kelley, chief executive at RoboCoin.
The Bitcoin startup spent tens of thousands of dollars on the project and hundreds of thousands on labor integrating biometrics into its ATM hardware. "It was not a cheap investment but we learned a lot about biometrics, customer security and customer enrollment," Kelley said. "And we set an interesting precedent for Bitcoin."
The biometrics authentication slowed down the enrollment and transaction process too much. While Kelley watched consumers use the RoboCoin machine that launched in Vancouver last November, he said his initial impression was: "holy cow, the workflow is terrible; it's not convenient."
Now, without the requirement to use a palm print, customers can enroll and start transacting in less than a minute, said Kelley.
Users will enter their phone number when they walk up to a RoboCoin machine. A verification code will be sent via text message for the user to input alongside a personal PIN. New users also have a picture taken of their photo ID and face.
RoboCoin was also worried about the scalability of biometrics. "When we're thinking about other products and other verticals, having to be pigeon-holed into using only machines with biometrics was going to be difficult," he said. "Making sure our software can go anywhere is very important."
Kelley hinted that RoboCoin may someday focus solely on software, and eliminating biometrics makes the company "one more step removed from hardware."
Biometric systems aren't out altogether for RoboCoin. "I'm always excited about the idea of biometrics for wallet authentication," said Kelley. When RoboCoin launches its iOS app in the near future, the company will do "cool stuff" with Touch ID, he said.
RoboCoin has shipped nearly 100 machines, 45 which are live in 18 countries. The machines support 14 currencies and 19 languages. Users are transacting between three and 10 times at each machine per day, said Kelley. Average Bitcoin purchases are $370 and average sells are $770, he said.
RoboCoin machines cost $15,000 and the company takes a 1% commission on the fee operators charge per transaction. On average, operators charge 5% on cash-in/cash-out transactions, Kelley said, and they break even in about seven months.
While most RoboCoin users are Bitcoin enthusiasts, Kelley said he'd like the machines and Bitcoin in general to become an alternative for underbanked consumers who typically keep cash under a mattress. "We're starting to see some really interesting remittance networks popping up," he said. "We've built the Redbox of remittance."