Once used primarily by security and law enforcement agencies, biometrics has currently become a mainstream solution for consumers to authenticate ID and ensure payments. From facial recognition to smartphone fingerprint scanners, most of us are already using biometrics towards unlocking devices and access apps. However, what is biometric payment and how is it used?
What is Biometric Payment?
Biometric payment is referred to the utilization of the physical characteristics of the individual towards authorizing payments or completing a POS or Point of Sale transaction. Fingerprint scanning is one of the most common types of biometric payment mechanism. However, there are several different types of biometrics data that can be leveraged towards verifying the identity of the individual as an integral part of payment authentication.
Some of the common types are:
- Recognition of the iris
- Signate recognition
- Vein patterns
- Voice recognition
- Facial recognition
What is Facial Recognition for Biometrics Payments?
Popularized by the Face ID technology by Apple, the mechanism of facial recognition works by leveraging infrared light for scanning the face and highlighting thousands of dots towards authenticating the identity. You can look forward to authenticating payments by looking at the smartphone while using the digital wallet like Apple Pay or Samsung Pay.
The technology of facial recognition for biometrics payments is increasingly becoming mainstream. As pe the industry standards, it is expected that the technology will be implemented in more than 800 million devices by the end of 2024.
An instance of biometric payments with the help of facial recognition is the new pilot by Mastercard -enabling users to scan the palm and face at the dedicated payment terminal while checking out.
What is Fingerprint Scanning for Biometrics Payments?
While utilizing fingerprints towards identifying individuals has been significant for several years, the technology did not become prevalent for several years. However, it did not become conveniently accessible to end users until the time of 2013. It was then that Apple came forth its smartphone model iPhone 5S -supporting the technology of fingerprint scanning.
The presence of fingerprint sensors on smartphones utilizes the mechanism of optical scanners. It is placed directly onto the display. In some cases, this technology also leverages the concept of ultrasound scanner.
Biometrics-based payment cards -available as EMV cards, are equipped with the embedded sensor. These cards can be utilized directly towards verifying the identity of the cardholder while completing the purchase.
How Does the Technology of Biometrics Work?
Let us take the instance of the consumer making the first-ever biometric payment with the help of the credit card or debit card.
- Registering and Enrolling: Firstly, the customer is expected to sign up at some financial institution offering the utilization of biometrics for ensuring payments. Once the users have obtained access to the biometric payment card, they can start the process of enrolling the respective fingerprint onto the card.
The data is eventually secured and stored on the built-in chip of the card -not on the servers of the fintech company. Typically, a mathematical representation or model of the respective biometric data is stored -in contrast to the fingerprint.
- Initiation of Payment: Once the biometric-enabled card has been activated by the customers, they can go ahead with making the purchase of their choice. Let us consider that the customers are at the checkout line. At the checkout point, there is the presence of a dedicated POS or Point of Sale system for accepting biometric payments.
The merchant can consider inviting the customers to make use of the respective payment device towards verifying their identity and completing the purchase. Depending on the technology utilized, the step might involve customers tapping the respective card into the payment terminal at the store. It is also important to make sure that the thumb of customers are placed into the built-in chip.
- Authenticating the Purchase: The biometric-based data is gathered and matched -all on the given card. Once the green light is provided, the transaction’s authentication takes place through the payment processor. This helps in creating a secure connection for transmitting the transaction details and card-specific data.
The funds will get withdrawn from the account of the cardholder. Eventually, the funds are deposited into the account of the merchants.
What are the Benefits of Biometric Payments?
There are several benefits to accepting biometric-based payments -both for the consumers and merchants, including:
- Stronger Security: Like other types of technologies utilizing the biometrics mechanism (including laptops, smartphones, and others), biometric-centric payments are typically known to store data locally. At the same time, biometric EMV cards mostly work by leveraging the high-end NFC technology. Therefore, it is difficult for fraudulent entities or parties to hack the same.
Even if you end up losing your card, it would become almost impossible to utilize the same without your fingerprint -further minimizing the overall risks of fraud.
- Streamlined Checkout Process: A contactless biometric payment system will take significantly less time than dipping or swiping a card and entering the dedicated PIN. Biometric solutions can help in creating an improved payment experience while also boosting brand loyalty and assisting high-volume businesses to serve customers faster.
- Absence of Processing Fees or Hardware Upgrades: As the biometric-based payment system is typically a contactless card with the help of fingerprint recognition, merchants are not required to buy additional hardware.
As contactless payments also do not add extra fees or hidden charges, you are no longer required to worry about operating your business at a loss.
- Industry-specific Certification: It is no surprise that you might be worried about the latest payment technology as soon as it enters the market. In this aspect, it is important to note that leading industry players like Mastercard and Visa have dedicated significant R&D resources towards the development of the latest biometric payment standards.
What are the Disadvantages of Biometrics Payments?
While there are several advantages of using biometric technology for ensuring payments, there are some drawbacks at the same time. For instance, some consumers might be hesitant to offering their biometrics to a large-scale enterprise -even after the implementation of the security standards.
There is also the potential risk of fraudulent players that have entered the domain of biometric payments. They leverage the technology for ulterior objectives.
Ultimately, there is always a smaller chance of ensuring a false positive. It could take place if someone would steal biometric card while leveraging the fingerprint to ensure the payment -even without enrolling the biometric data. However, industry-specific data benchmarks the possibility of .01 percent -making it almost impossible to take place.
What is the Future of Biometric Payments?
While the biometric technology remained in the hands of the customers for quite a while, the utilization of biometric authentication for payments continues remaining newer in a wide range of markets. However, the pace is picking up rapidly. According to the latest study reports, it is estimated that biometrics will help in authenticating around $2 trillion in payments by the end of 2023 -a significant increased from around $124 billion in 2018.
To be ahead of the competitive curve while meeting the increasing customer demands, one assured aspect is that resellers and e-Commerce merchants should go ahead with accepting payment methods like biometric payments and contactless payments. It will ensure both continued growth and consumer satisfaction.
Open banking is another core domain that aims at collaborating with biometric payments for providing additional layers of security. Customers can leverage personal fingerprints or facial scans to instantly authenticate and give approval to open banking transactions. Ultimately, there will be benefits to consumers and merchants alike. Safety and convenience remain at the forefront of mobile and online purchases such that you are able to improve the conversion rates by leveraging a wide range of payment methods equipped with the additional layer of biometric security.