The Future of Biometrics in Payments
Bob Graham, Senior Vice President – Head of Banking & Financial Services, VirtusaPolaris.
The global explosion of mobile payments is driving the need for a more secure authentication system – an alternative to traditional authentication techniques is cloud based mobile biometrics. Biometrics related to payments is ultimately about ways to enhance authentication. Indeed, the Biometrics Research Group, Inc. expects that worldwide mobile payment transactions will reach $250 billion in 2014, reaching $750 billion in annual transactions with more than 700 million users by 2020.
Some of the core drivers around biometrics are how to increase usability and provide a better customer experience, while at the same time reducing fraud. The biometrics payment market is clearly set to grow, with key players in the space including Visa, MasterCard and Amex. Along with merchants, payment processors and card issuers, mobile wallet vendors like Apple and Google, and mobile device manufacturers like Samsung are developing solutions.
Biometric adoption on the rise
Currently, adoption of biometrics solutions is happening across two forms of payment – mobile and online. Apple Pay popularised the use of fingerprints for authenticating payments, and now Samsung Pay and Android Pay have followed suit. Mobile banking applications and applications from credit card issuers (e.g. American Express) now also employ fingerprint authentication. Retailers including Amazon and AliPay are exploring biometric solutions like facial scanning. And card issuers such as MasterCard are piloting new ways to pay, by introducing their Identity Check App, which lets users pay with their face.
How biometrics improve customer experience
Biometrics improves the customer experience because users do not have to remember a myriad of passwords or PINs – something which users find annoying and lead to them simply abandoning a transition. On the usability and convenience front, biometric characteristics, by their very nature, are something the user always has easy access to, are extremely difficult or even impossible to counterfeit, and completely unique to the user. And all of this doesn’t require changing frequently or making sure to include non-numeric symbols, capital letters and a number, like many companies now require for passwords. Ultimately, the nature of biometrics make the customer experience a much more secure, sleek and seamless one.
Reducing abandoned transactions and improving security
When you look at authentication there are typically two elements – a user ID to identify who you are and a ‘password’ to confirm that you are who you say you are. Biometrics could allow companies to provide a secure method of authentication for the user without placing a burden on the user to recall all the nuances of that authentication. This would not only dramatically lower user friction but should greatly reduce fraud.
Further, because the checkout process can be made more secure and streamlined with biometric authentication, it can be a much better experience for customer. This could result in a significant reduction of abandoned transactions that occur at checkouts when users can’t remember their password or find the checkout process to complex. The industry has clearly started with fingerprint authentication but is exploring and piloting other forms of biometrics including handprint, facial recognition, retina scan and voice to more ‘internal’ options such heartbeats and embeddable, injectable and ingestible devices.
What does the future hold?
The adoption and use of biometrics is set to go only one way, and that’s up. Because we are talking about a huge amount of money in commerce overall, investment will keep pouring in. A study released by Lemon Stand found that the E-commerce market is worth $1.6 trillion globally with mobile currently representing less than 10 percent of that figure, but is growing rapidly. The rise of mobile payments and need for secure, easy to use solutions is pushing many companies towards transformation of the payment and authentication process, hence the use of biometrics will become more widespread.
In the future, we will also see other forms of biometrics emerge. In addition to fingerprint, voice, facial recognition and iris scanning, there are companies working on biometrics triggered embeddables, injectables or ingestibles. Examples range far and wide, ranging from a biometric wearable tattoo with a thin silicon chip that can be inserted into the skin, to the idea of injectable chips mooted by PayPal. Time will tell whether these futuristic sounding ideas will see broad consumer population, but one thing is certain – biometrics are here to stay in the payments space.