Noted code sleuth Ron Amadeo has dug through the commits to the Android Open Source Project (AOSP) and found the evidence. There was a commit from late August that was blatantly labeled as "shamu: remove fingerprint support", which implied that prototypes had been using a fingerprint scanner from Validity Sensors, Inc, a company that was acquired by Synaptics last year. The company has shown off clear touchscreen-based fingerprint scanners in the past, which are pretty cool and wouldn't require the big bezel that you'll find on an iPhone.
There are also commits to AOSP which were used to hide the fingerprint API code in Lollipop "until new API is ready". There were indications that it would be a swipe style fingerprint scanner similar to those used by Samsung, rather than the TouchID sensor on an iPhone. And, part of the code pointed to functionality which would allow you to access or authenticate specific apps with your fingerprint.
It all sounds pretty sweet. It's just a shame it didn't make it in time for the Nexus 6 release. We'd say that it wouldn't be a surprise to see that fingerprint API in Android 5.1 next year though.
source: Ars Technica