Biometrics presents new possibilities for card payments

In just five years since Apple introduced Touch ID on the iPhone 5S in 2013, we’ve seen an explosion in the growth of smartphones featuring biometrics. This, alongside the significant success of contactless payments cards and now the emergence of biometric payments cards, is paving the way for a paradigm shift in how consumers will make payments in the future.

Across the world, PINs and passwords are being replaced by more secure and convenient solutions using biometrics. Hundreds of millions of mobile users have grown accustomed to fingerprint technology thanks to the ease of unlocking their phones in a fraction of a second simply by a quick touch. With customer experience and convenience acting as major drivers for the adoption of biometrics, using this technology also to authenticate payments is the natural next step. According to the Biometrics research group, biometrics for financial products and services are expected to represent one third of the total market for biometric solutions in 2020.

The increased use of smart mobile devices for financial transactions has prompted banks, payment providers and regulators to demand increased levels of security and identity assurance to provide better protection against fraud. The biometrics and payments industry needs to meet these needs while reshaping customer experience and enhancing user journeys to achieve higher customer satisfaction, lowered costs of interaction, greater customisations and subsequently increased profit as a result of reduced friction.

PSD2 (The Second Payment Services Directive) has recently been implemented across the European payment market. This requires two-factor authentication for electronic payment services and bank transactions and is an important step in raising security levels in the fight against fraud. Adding more layers of authentication inevitably means increasing friction in the payment process but at the same time, PSD2 and related regulation provide an opportunity for biometrics. This technology, enabled through mobile devices equipped with fingerprint authentication and other biometric modalities such as face or iris, can replace passwords and PIN codes, which are slow and less secure than biometric technologies, such as fingerprint authentication.

Biometrics are expected to have a big impact on payment cards in the coming years. The growth in contactless payments, which according to Visa has increased from one out of every eight global transactions processed by the company, to one in five during Q2 2018, is driving interest in adding fingerprint authentication to cards. Contactless payment cards are convenient for small purchases, but the limit of around USD 25 still means that a PIN must be entered for many purchases. Removing PINs for small purchases has also led to fraud for contactless payments with consumer research by Fingerprint Cards revealing that this is a real concern for those using contactless payment cards.

Implementing fingerprint biometrics in contactless cards is a viable and convenient solution to strengthen security and while also improving customer experience. A secure chip in the card – the Secure Element – authenticates the fingerprint and it is designed to protect against intrusion and prevent manipulation. While there are technical obstacles to overcome due to the memory and processing power limits that Secure Elements have, the benefits are significant; the risk of fingerprint data being stolen is considerably reduced, equalling bank grade security for the entire payment process. The same security cannot be achieved if fingerprint authentication takes place outside of the card’s secure zone.

By adding fingerprint authentication to payment cards, it reduces, or even completely removes, the need for today’s purchase limits on contactless payments as all transactions are secured.

The evolution for payment cards is already well underway. The first market trials are now complete and in 2018, several commercial pilots of contactless biometric cards have started across the globe – in Europe, Japan, Middle East and USA.

Of course, we’re still at an early stage in the use of biometrics. It’s clear to me however that the technology presents exciting new possibilities in this space and beyond, as growing interest and usage of biometrics will lead to further innovation beyond authentication and are set to gain widespread acceptance.

If you’re interested in biometric payment cards, our whitepaper Biometric Payment Cards – How to secure contactless payments is available to download. It’s a helpful aid that explains in more detail what’s driving the interest of biometric payment cards, market development and technical solutions.

About Fredrik Sjöholm
Fredrik Sjöholm is Senior Director Business Development at Precise Biometrics. He has extensive experience from business development and sales in innovative technology companies such as Cybercom, ENEA, Sony Mobile and Telelogic/IBM. Fredrik leads business development at Precise Biometrics, leveraging his expertise to introduce biometrics in new application areas, in particular for payments.

About Precise Biometrics

Precise Biometrics is a market-leading supplier of solutions for convenient and secure authentication of people’s identity. We develop and sell fingerprint software that provide the market’s best user experience and security. Our solutions are used hundreds of millions of times every day by people all over the world and are marketed together with strong business partners. For more information, please visit https://precisebiometrics.com Follow us on LinkedIn and Twitter.