The future of biometric payments
Biometric tech enters the mainstream
In 2003, biometrics were mostly restricted to law enforcement and high-security applications. Fingerprints, DNA and other physical markers were widely used, but the scope of other technologies was limited and didn’t really grab our attention. Facial recognition in particular had growing pains, with a consultant for America’s Transportation Security Administration (TSA) pointing out that tests of facial recognition systems in airports had failed to spot a single wanted person.
Fifteen years later, biometric technology has evolved and become part of our daily lives. Facial recognition is no longer an unreliable experiment – the iPhone X’s neural engine uses 30,000 dots and infrared imaging to apply animated emojis to the faces of millions of people, while also authenticating their identities and authorising purchases.
Biometrics are still used in passports, voting systems and other large-scale applications, but now the technology is literally in the hands of consumers, replacing forgettable passwords and making payments faster and safer.
What defines a biometric system?
Researchers in 1999 highlighted seven factors a successful biometric system should fulfill: universality (all people should have the physical feature); uniqueness (it should always differ); permanence (it shouldn’t vary too much over time); measurability (it should be easy to collect information about it); performance (measuring it accurately shouldn’t take too long); acceptability (people should feel comfortable having it measured); and lastly, circumvention (the trait should be difficult to fake).
Dozens of physical features can be used to positively ID an individual, with some ticking more of these seven boxes than others. At the top of the list are fingerprints, which are the most-used biometric feature in the world thanks to how quickly, cheaply and reliably they can be recorded and compared. Since 2010, India’s national biometric system, known as Aadhaar, has collected fingerprints from more than one billion residents. The system was launched to ensure people received welfare benefits they’d previously missed out on. Now the national scheme is powering payment solutions such as Micro ATMs, which are modified point-of-sale devices equipped with keypads and fingerprint scanners. Biometric-enabled Micro ATMs are introducing cashless transactions to rural and remote areas, moving India closer to becoming a cashless society. Nearly 30% of smartphone users in India will use phones to make a transaction at the point-of-sale at least once per month in 2018.
The smartphone puts biometrics in everyone’s hands
Across the world, smartphones have effectively put a point-of-sale device into the hands of every consumer. Phones with fingerprint scanners have been around since the Toshiba G500 in 2007, but it was 2013’s iPhone 5S that triggered widespread consumer adoption of devices with fingerprint sensors. Currently more than half of smartphones across the world ship with integrated fingerprint scanners, and it’s been estimated that 98% of mobile devices will be biometrically enabled by 2022.
Apple recently replaced Touch ID with Face ID, but the future of biometrics on smartphones will be multi-modal; using multiple physical features to recognise the user and allow access to apps, including banking and payments. Samsung is leading the way with Intelligent Scan, which uses facial recognition in combination with iris scanning and fingerprint sensing to create a secure, passive authentication process.
People are ready to swap PINs for biometrics
Consumers appear more than ready for biometrics. A study by IT company Unisys in 2017 found that nearly seven in 10 Europeans would trust organisations more if they used biometrics for authentication. It also revealed consumers are ready for biometrics to replace passwords or PINs, which are increasingly hard to remember (according to Intel Security, the average person has 27 different online logins).
Consumer interest in biometrics stretches far beyond Europe. A survey by Visa last year revealed that 86% of Americans are interested in using biometrics to verify their identity or make payments, with the majority highlighting the elimination of multiple passwords and PINs as the main benefit.
Enthusiasm is even greater in the United Arab Emirates, where a 2018 Visa survey showed 98% of consumers are keen to use biometrics for payments. Specifically, 69% are interested in fingerprint recognition, while 56% like the idea of eye scans. If companies in The UAE don’t adopt biometric authentication in the future, over three quarters of consumers said they’d switch away from them.
Biometric schemes around the world
Other countries marching forwards with biometric solutions include Japan, which will use the 2020 Olympic Games to publicise the benefits of biometric payments. On arrival at the games, guests will be able to scan their fingerprints and link them to their credit or debit cards. They’ll then be able to pay using just their prints in hotels, restaurants and souvenir shops.
In China, the fourth largest bank recently announced its own use of fingerprints in financial transactions. 160 ATMs across 18 districts were equipped with finger-vein authentication, which is a more advanced fingerprint technology that uses near-infrared LED scanning. More than 10,000 customers registered for the new system, which works even if skin is sweaty or blistered.
In the UK, consumer adoption of biometrics in smartphones is among the highest in the world. Research by Deloitte in late-2017 showed that 12 million UK smartphone owners use their fingerprint scanner, which was over a third higher than in 2016. Moreover, 35% of people who use their fingerprint reader use it to authorise payments and make financial transactions.
What’s next for biometric authentication?
Several fintech and social developments have combined in recent years to make biometric authentication more valuable than ever.
The number of connected devices, including smartphones, is still multiplying; there’s more international travel; and digital commerce is increasingly replacing physical checkout transactions. Biometrics consolidate dozens of apps and services that require authentication by turning the individual into the secure unit, instead of requiring him or her to remember a different piece of information every time they identify themselves or make a sensitive transaction.
In the same way contactless transactions have streamlined the payment process by removing the manual inputting of information, biometrics will remove the friction of identity verification across all aspects of daily life. By 2022, it’s predicted that more than 5.5 billion biometrically-enabled mobile devices will create a global platform capable of one trillion Cloud-based biometric transactions per year.