Biometrics in Payments: Pleasing Consumers while Fighting Fraud

The only stakeholders who are not interested in the adoption of secure, convenient, and effective user identification and payment transaction verification methods are the hackers who depend on weaknesses in the current password system to profit from fraud. They’re likely threatened by the biometric recognition technologies beginning to flood the marketplace and take hold among financial institutions, third party payment processors, merchants, and consumers.

Biometrics are booming so much, in fact, that ABI Research expects consumer and company spending on biometrics to surpass governmental spending in 2018, exceeding $8 billion in total revenues. Industry consultancy Goode Intelligence reports in their white paper,Biometics – the Must-Have Tool for Payment Security, that over 350 million customers around the world are using biometrics on a daily basis to perform user authentication and authorize transactions. Analysts forecast that by 2020, there will be over 3 billion biometric payment users.

Answering the Call for Convenience and Security

Goode Intelligence has identified five key trends, detailed on PlanetBiometrics.com, that are driving the adoption of biometrics for financial services:

• Biometrics replacing PINs for ATM security
• Contactless mobile payments driven by mobile payment solutions
• Rising Card-Not-Present (CNP) fraud tackled by mobile biometric authentication
• Wearable payments
• Multi-modal biometric authentication becoming da-facto for mobile banking apps

These innovations in biometrics are in sync with consumer payment trends, namely that transactions are increasingly cashless and mobile-based and wearable devices are becoming more popular. Though some market segments adopt technology faster than others, consumers are largely embracing change—they’re willing to bring their smartphones to the register and manage their finances through mobile applications, for instance. And biometrics provide added layer of security at the register and ATM, a fact not lost on consumers, many who are already using their fingerprints to access their smart phones.

As a result, financial services companies and merchants are integrating biometric technology into their digital solutions. A SecurityIntelligence.com article cites research stating that biometric technologies have the potential to reduce operational risks for financial institutions by at least 20% over the next 10 years.

More Than Mobile

While Goode predicts that 1.1 billion financial services customers will be using mobile biometrics by 2020—by which time over 16 billion mobile biometric payment transactions will be made—mobile isn’t the only payment method being impacted by the technology. Solutions are being developed to secure transactions taking place in-branch, electronically, and over the telephone. Additionally, biometric technology is being applied to wearables and even banking and payment cards.

There’s no shortage of compelling evidence that biometrics will continue to make its mark on the various ways people pay. We will provide insights on innovations and report on the what’s trending in the market for biometrics tech. In the meantime, read more in Shop, Smile, Pay? Facial Recognition in Payments.