Biometrics: The Future of Payments?

What are Biometrics?

The term biometrics is defined by as “the process by which a person’s unique physical and other traits are detected and recorded by an electronic device or system as a means of confirming identity.” The use of biometrics has grown over recent years, with a 2017 survey by Visa reporting that two thirds (65%) of consumers said they are at least familiar with biometrics.

A few of the most common methods biometrics are used to confirm someone’s identity include fingerprint scanning, facial recognition, voice recognition, and iris recognition.

Biometrics in Payments

One use of biometrics is for payment authentication. Biometrics can be used on mobile devices to authenticate payments, removing the need for purchasers to remember a PIN or password. Will PIN numbers and/or passwords become a thing of the past? New developments in biometrics suggest this may be the case. At one time, the use of biometrics was reserved for high-security applications, but it is now moving into the mainstream.

A recent study from Juniper Research predicts that mobile biometrics will authenticate $2 trillion in remote and in-store payments in 2023, up from an estimated $124 billion in 2018. The study also estimates that over 80% of smartphones will have some form of biometric hardware by 2023.

Types of Biometrics

Biometric authentication can broadly be broken down into two types - physiological biometrics and behavioral biometrics. Examples of physiological data are fingerprints or the shape of one’s face. For example, Apple’s Touch ID fingerprint scanner uses fingerprint authentication to unlock iPhones and Apple’s mobile wallet, Apple Pay®.

Behavioral data might include things like keystroke dynamics (the rhythm of your typing), signature dynamics (the pressure exerted and the speed by which you move a pen), or the way you use a mouse.

Of course, different types of measurements don’t necessarily possess the same level of reliability. For example, physiological measurements - like a fingerprint - typically remain stable over the course of one’s lifetime. On the other hand, stress might alter the way in which you type on a keyboard or use a mouse. So it’s possible that in the future, different biometrics will be used in combination. This could help reduce error rates - that is, the incidence of “false rejection” or “false acceptance.”

More likely, still, behavioral biometrics will be combined with machine learning and risk assessment techniques to help authenticate users. For instance, if you’re shopping online the system might take into consideration your IP address (are you trying to hide it?), your geo-location (is it what’s expected?), and whether your order is suspicious in any way. The value of the purchase might be taken into consideration as well. For instance, a low dollar-value transaction that is in keeping with expected behavioral patterns might be processed instantly, but if the transaction is perceived to be high-risk (say, due to a suspicious IP address), the transaction might be blocked or put “on hold” until you provide additional information.

Advantages of Biometrics in Payments

High Security

The main advantage of biometrics is that they allow you to prove your identity using characteristics that make you unique. Since the data is “something you are,” it’s much less likely to be forgotten, stolen or forged, in contrast to using something you possess (like a document or card) or something you know (like a password or secret phrase).

Improved Customer Experience

Biometrics provide a lower level of friction in payments than passwords. Using biometric authentication for payments is quick and convenient. Users don’t have to remember passwords and PINs

Competitive Edge for Businesses

Using biometrics in payments provides better security. Better security helps increase customer trust in a business, leading to improved business opportunity. Security and security threats are always evolving and it is important to stay ahead of new trends emerging in order to keep up with or advance before your competitors.

Disadvantages of Biometrics in Payments

Concerns over Personal Data

One potential issue is that biometric data is arguably the most personal and private data that anyone has, and in the case of physiological data, the individual can’t readily change it. If it is compromised, it cannot be reset like a password or PIN can. Consider the possibility of one’s fingerprint being stolen and then fraudulently used, for example. Another possibility is that biometric data might ultimately be used for purposes other than it was originally intended - by third parties, for instance - another major risk to security and privacy.

Fear of the Unknown

This perhaps explains why only 46% of 12,000 consumers surveyed for HSBC’s “Trust in Technology” report (2017) said they trust fingerprint recognition to replace passwords, and just 26% trust iris recognition to do the same. On the other hand, “trust in biometrics tripled after a simple explanation,” notes the report. At any rate, it’s clear that establishing trust in biometrics will be the key to successful adoption.

Initial Technical Investment

Retailers who want to accept biometrically-authenticated payments will of course need to purchase and install the equipment necessary to do so. In a 2018 survey by IT community Spiceworks, 67% of IT professionals cited cost as “the biggest reason for not adopting biometric authentication.”

Innovation in Biometrics

The move towards biometric payment cards - not to mention other biometric-related innovations - is being driven by banks, merchants, and consumers alike, all of whom are seeking improvements over the current password/PIN system.

For some, the future can’t get here soon enough. In fact, according to Visa’s recent survey of 1,000 adult Americans who use at least one credit or debit card and/or mobile pay, consumers are really looking forward to the widespread adoption of this technology. Sixty-seven percent say they are interested in making payments using fingerprint technology in the future, and more than 50% advised that they would switch away from a card network or bank that didn’t offer biometric authentication at some point down the road.

It looks like the future may just be a step . . . or rather, a fingerprint away.


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