A finger sensing device may include an integrated circuit (IC) substrate, an array of finger sensing elements on the IC substrate, and image watermark circuitry on the IC substrate and cooperating with the array of finger sensing elements for generating finger image data with an image watermark embedded therein. The finger sensing apparatus may also include match circuitry on the IC substrate for performing finger matching based at least upon the image watermark. The array of finger sensing elements may include an array of finger sensing pixels. The image watermark circuitry may distort values from the array of finger sensing pixels to generate the finger image data with the image watermark embedded therein. The watermark circuitry may distort position values from the array of finger sensing pixels.