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Next Steps in the Evolution of Biometric Payments

By January 25, 2019
Next Steps in the Evolution of Biometric Payments

As part of our Biometrics for Financial Services Series[i] our latest webinar discussed how biometric payments have come of age.  We covered a number of aspects of this important topic including:

  • Biometric payment models
  • Market trends and forecasts
  • Market development for biometrics in smartcards
  • Key success factors for biometric smartcards including customer experience and convenience, security and ease of implementation within existing infrastructures
  • Case studies and pilots currently underway across the globe

Including myself, our panel included:

  • Lina Andolf-Orup, Fingerprint Cards
  • Sara Ellinger, NXP
  • Fredrik Sjöholm, Precise Biometrics

As Biometrics is fast becoming the go-to tool for banks and payment services providers in the continuing fight against fraud across both traditional and emerging payment channels, I opened the session by sharing some of the research we’ve been carrying out recently at Goode Intelligence around Biometric Payments.  A key observation is that biometrics is one of the few technologies that can support payee authentication and transaction authorisation in so many payment channels.  This includes:

  • In-store at the point of sale using biometrically enabled smartphones, naked payments using integrated biometric sensors and biometric payment cards
  • eCommerce using the latest FIDO WebAuthn standards
  • Mobile in-app payments
  • Withdrawing cash from a biometric ATM
  • Authorising payments using your voice through the telephone channel
  • Supporting payments in emerging channels such as in-car biometric payments, smart home devices and smart wearable devices with integrated biometric sensors

Payments have certainly been the major driving force for the wide-scale adoption of biometrics in today’s consumer market. With millions of customers already using biometrics on a daily basis around the world to provide secure convenient user authentication, identity verification and transaction authorisation, we can see that this trend is set to continue over the coming years.  In Biometrics for Payments we predict that there will be almost 579 million biometric payment cards in use around the world by 2023.  By 2020, these will be used by 1.2 billion users, rising to over 2.6 billion biometric payment users in 2023.  This will enable frictionless customer authentication for higher-value contactless card transactions to deliver enhanced customer experience and security.

To achieve this, Fredrik Sjöholm from Precise Biometrics described the three areas needed to be successful; the biometric smartcard must deliver convenience (the speed and performance has to be very good) balanced with security (this is essential for both the user and the issuer) and it must be easy to integrate into existing infrastructure (such as retail sale terminals so that it doesn’t result in high extra costs).  Fredrik also highlighted that the potential for biometric payments is reaching beyond smartcards as they are seeing first-hand an increasing interest in using biometric smartcard solutions for government cards to support areas such as social services and for retail loyalty cards.  Building on this, Sara Ellinger from NXP explained that there are benefits for the whole market in using biometric smartcards and that the challenge is to satisfy the market, provide the customer experience and required security: “all three are key for success, if one is missing or failing then it won’t be successful.”

Finally Lina Andolf-Orup from Fingerprint Cards discussed some of the challenges that need to be overcome to drive the use of contactless cards – something that biometric smartcards are well placed to support banks and card issuers with.  Lina revealed that one of the barriers currently for contactless card growth around the world is a consumer perception that the cards are lacking in security.  This is coupled with confusion about how and where contactless cards work and a frustration with the upper spend cap which is fairly low (currently €30 in Europe) and means that a PIN often needs to be used.  By introducing biometric smartcards, the issues around security and customer convenience can both be appropriately addressed and is actually the next logical step for consumers.  “Biometrics can be the ‘glue’ between the physical and digital worlds”.

So when can we expect to see these new biometric smartcards being used in earnest?  The consensus is that following the pilots that are already underway in a number of countries and regions, the ramp-up will start later this year with certifications being approved and the first deployments.  Our predication matches this consensus with larger commercial rollouts occurring from 2020.

The webinar ended with a lively Q&A debate. There were some very insightful questions invoking great responses. If you would like to listen for yourself, a recording of the webinar is available at https://zoom.us/recording/play/pqXMUPmq-JXpJkQYI2Bg–I7xyZhs17WXhPTvRry-7M_za9gr6ekav5EzYQ3TvaV or if you would like to hear more about this and other topics, future webinars and events, please sign up for our monthly newsletter Konnect at http://eepurl.com/dPqAY1 You can also follow us on Twitter @goodeintel.

[i] The Financial Services Series is made up of three separate Analyst Reports: Biometrics for Banking, Biometrics for Payments and Mobile Biometrics for Financial Services.  See https://www.goodeintelligence.com/report-type/analyst-reports/ for further information