Phone, wallet, keys - the three “essentials” everyone scrambles to find before leaving home. Traditional payment transactions require consumers to remember to bring something to a restaurant or shop. You need cash in your pocket, cards in your wallet or a smartphone with stored card data. Leave home without one of these, and you’re out of luck.
To overcome this challenge, some businesses are beginning to integrate biometric authentication into their payments solutions. With biometric payments, you can authorize a purchase anywhere - even if you forget the essentials at home.
What Are Biometric Payments?
Biometric payment solutions allow people to pay conveniently and securely based on their unique physical characteristics. These characteristics might include your voice, fingerprint or facial features.
The purpose of biometric technology is to verify a person’s identity with physical attributes. Unlike a pin or card number, your physical characteristics are unique to you and can’t be replicated by someone else.
Biometric payment solutions generally require consumers to scan their eye, palm, fingerprint or face and link that information to an account. Systems include security measures, such as encryption and tokenization, to protect the user’s identity and account data. When it’s time for consumers to pay, they initiate a follow-up scan which confirms their identity and starts the transaction.
Biometric payment can be integrated into traditional point of service (POS) devices or user-friendly, self-service kiosks. Biometric solutions make payments fast and simple.
Types of Biometric Authentication for Payments
The type of biometric authentication differs from solution to solution. Systems can base payment authentication on various characteristics, including fingerprints, facial features, voice recognition and more. While all of these options have their pros and cons, some are more popular than others.
The most common form of biometric authentication is fingerprint scanning. Fingerprints offer an easy way to unlock smartphones, authorize payments and confirm a person’s identity. Compared to traditional payment options, fingerprint scanning is incredibly user-friendly and secure.
Unfortunately, this method comes with its share of issues. For instance, fingerprint scanning requires contact with the reader, so dirt or oils on the interface may interfere with an accurate read. In addition, some people may be excluded from using the system because of hand injuries or other complications. That said, fingerprint scanning continues to be one of the most frequently used forms of biometric authentication.
Facial recognition uses a smart camera to capture an image of a consumer’s face and compare it to data on file. For instance, a facial scan may measure the distance between points on a person’s face, such as the space between their nose, eyes and jawline. Some scans may also consider skin details. Once the scan is complete, the system will turn the data from these “facial landmarks” into numbers that can be encrypted or tokenized to verify a person’s identity in future scans.
Facial recognition is fast and convenient. However, consumers may be uncomfortable with a company storing their image in a database – and with good reason. Although many services encrypt biometric data rather than saving direct images, techniques that can hack or trick these systems are emerging. Thankfully, events like the machine learning security evasion competition at IEEE’s Def Con encourage work to eliminate vulnerabilities.
Iris scans recognize unique characteristics in a person’s eye - specifically in the iris. These scans are accurate and reliable and solve two common biometric challenges:
- Hygiene: Because the system scans a user’s iris from a distance, this form of authentication is more hygienic than fingerprint scanners
- Security: Iris recognition systems automatically encrypt iris scan data, eliminating the risk of hackers accessing identifiable images
Unfortunately, iris scans can be overly sensitive; they require users to be at a proper distance and in good lighting. Images must also be free from obstructions, including eyelashes and contact lenses. Otherwise, the imaging system cannot verify a person’s identity or authorize a purchase.
Another biometric payment method gaining momentum is palm vein authentication. This solution requires customers to hold their hand over a reader, usually equipped with a near-infrared (NIR) sensor. This allows the reader to capture an image of the vein patterns in a person’s hand to authorize a purchase.
This method is fast, hygienic and private – vein patterns aren’t recognizable under normal conditions. Amazon has already launched a version of palm vein scanning, called “Amazon One,” in Whole Foods around California. The downside is that consumers with arthritis or other conditions that affect their hands may be unable to use the technology.
Another type of biometric authentication is voice recognition. This method uses audio instead of an image to authenticate a consumer’s identity. Voice recognition compares a customer’s voice to a prerecorded sample. Voice authentication can be cost-effective compared to other options, especially if a business has a terminal with a built-in microphone.
Unfortunately, most systems require a quiet environment to recognize a voice accurately - something that’s difficult to achieve at most in-person businesses.
Biometric authentication offers consumers a fast, simple and secure way to pay. Although some are safer than others, biometric solutions are generally more secure than traditional payment options, such as using physical cards or pin numbers (PINs).
Greater security benefits everyone in the payments chain, from consumers and merchants to payment service providers and banks. PINs, signatures, smartphones with mobile wallets and even EMV chips contribute to fraud prevention – but criminals can find ways around them.
Even the most conscientious merchant can never know with 100% certainty that the person using a payment card is authorized to do so. Biometric authentication solutions make it more difficult (if not impossible) to charge an account fraudulently.
Biometric Payment Adoption
To date, the global adoption of biometric payments has been mixed. For example, facial scan payments have become common in East Asia over the past five years. In Europe, biometric cards are growing in popularity. On the other hand, U.S. consumers, who have access to more payment options (and are increasingly concerned with privacy), have been slower to adopt this new technology.
NMI’s consumer payment pulse survey found that 91% of U.S. consumers are familiar with biometric payment technology, but only 36% have used it. The survey also found that among people unfamiliar with biometrics, 47% would use this technology if more businesses offered it.
A Trend to Monitor
Although biometric authentication solutions are relatively new in the payments space, consumer interest is growing. The potential to enhance consumer experiences and fraud mitigation capabilities are two core drivers of adoption. Research firm Facts and Factors estimates that the biometric market, valued at $32.8 million in 2021, will grow to more than $56.6 million by 2028.
As adoption rises, there is an opportunity for payments providers, such as ISOs, banks and merchant acquirers, to take advantage of this innovative technology.
If you decide to offer biometric payments to your merchants, be sure to:
- Create a roadmap to help merchants evaluate biometric payment solutions and choose the authentication type best suited to their customer base
- Inform them about various options, the cost to implement these tools and any accessibility issues associated with their chosen system
- Ensure all merchant IT solutions are secured and monitored for potentially nefarious activity. This will reduce your company’s risk while allowing merchants to protect their customers’ data and their businesses
As biometric authentication becomes more prevalent, payments specialists must use their industry and technology expertise to educate merchants about the pros and cons of biometrics. Education and collaboration will ensure your clients provide the best possible experiences for all their customers.
Only time will tell if biometric authentication for payments will replace traditional options. The best strategy is to educate yourself on this technology and build agility into your offerings to meet customer demands.
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