What does the future of the payments industry hold for this year? Advanced technologies and growing consumer preferences and behaviors have laid the foundations for an exciting 2019. Biometrics authentication through fingerprint or iris scanner is one such innovation which is likely to gain a larger share as a contributor to the payments industry helping in AEPS. This new technology is continually evolving and becoming faster and more trustworthy when it comes to using it in the payments industry. What might be in store for biometrics that can bring a drastic change in the payments industry?
“Credit-card companies, banks and vendors are changing how they verify consumers’ identities. Passwords and PINs could become less important. Biometric analysis could become the norm.”, mentions the WSJ.
The endless growth of biometrics is steering in a new model in payments. The accuracy and speed of biometrics is being advanced to a level where they are being widely adopted for payments transactions. Biometric identification and authentication are becoming more commonplace and it is anticipated that more than half of consumers with access to this new technique will use it on a regular basis. Thus, PINs and passwords authentications are being replaced by a more secure and convenient option of using biometrics through fingerprint or iris scanners in-built in payment terminals (android POS machines) or the mobile devices. Hundreds of millions of mobile users have grown accustomed to iris and fingerprint technology, thanks to the ease of unlocking one’s phone in a fraction of a second by simply seeing in the screen or a single touch. But the use of biometrics to authenticate and confirm payments is expanding the demand on security and identity assurance. It´s a challenge for the biometrics and payments industry to meet these increased security demands while keeping friction in the payment process to a minimum.
Payments emerged as the single largest driver for the biometrics showcase. Biometrics for financial products and services are expected to represent 1/3rd of the total market for biometric solutions in 2020, according to the Biometrics research group. Payment providers and financial institutions support the replacement of PIN codes and passwords with biometrics to authenticate payments and other transactions on mobile devices, mPOS and point of sale devices.
The increased use of smart mPOS or regular point of sale devices for financial transactions has incited banks, payment providers and regulators to demand increased levels of security and identity assurance to provide better protection against trickery. This is compelling the demand for multi-factor authentication for payments and bank transactions. Adding more and more layers of authentication likewise implies increasing friction in the whole payment procedure. Such mPOS or POS machines equipped with fingerprint or iris scanners for biometric authentication empower the replacement of passwords and PIN codes, which are slow and not as secure as biometrics technology.
To further increase the security of biometrics, anti-spoofing capabilities, such as liveness detection, can be acquainted in the biometric system to detect and stop spoofing attempts. However, as per the Acuity Research, consumers are prepared to accept an appropriate level of friction depending on the risk and value of the transaction. This implies that two-factor authentication with anti-spoofing functionality is probably not required or acceptable for unlocking a smartphone, yet very much relevant while authenticating a banking transaction or making a payment through POS machine at a retail store.
Equipping payment with biometrics technology is a logical step to increase both the convenience and security of contactless payments. By adding biometric authentication to payment systems like AEPS, it additionally reduces, or altogether removes, the need for today’s purchase limits on contactless payments as all transactions are secured and verified, which reduces fraud and increases user convenience.
No longer the stuff of sci-fi, biometrics technology is quick turning into a reality for present-day businesses and the consumers. Biometrics has been quickly inflated into consumer applications like the financial market for customer authentication to payment transactions and cash withdrawals from ATMs in high extortion markets. As indicated by a report from the Goode Intelligence, by 2020 1.9 billion bank customers will adopt and embrace biometrics for eKYC for a variety of financial services, including ATM cash withdrawals, proving identity for digital on-boarding, accessing digital bank services through banking POS devices and mobile bank apps. Biometric authentication for banking services is going to generate $4.8 billion of revenue by 2023. All the more in this way, by 2020 nearly every single smart device including android point of sale terminals, mPOS, mobile phones, tablets and wearables will have some form of biometric security enablement, be it a fingerprint scanner or an iris scanner.
Biometrics exhibits new opportunities to enhance the convenience of payments while expanding security and meeting prerequisites for stronger identity authentication. We are at an early stage in the utilization of biometrics and it is intriguing that biometrics at the point of sale terminals are just now getting consideration and being deployed by early adopters. The developing interest and usage of biometrics using primarily fingerprint or iris scanner will lead to more innovations where biometrics won’t just be used for authentication, but additionally for payments, personalization and interaction with things around us, improving people’s regular day to day chores. The triumphant equations will be the ones that will strike the correct harmony between comfort and security.