Introduction
Not too long ago, only security agencies and law enforcement agencies used biometrics. But in the last five years, there’s been a mainstream adoption of biometrics into the financial industry. Through biometrics, consumers can now make payments and verify their identity in an instant.
Rise of Biometric Payment Systems
Juniper’s research highlights that biometric payments are increasing at an exponential rate. In fact, the report states that the number of biometrically-verified cell phones used for payment transactions hit over $300 billion in 2022. Whether it’s smart facial recognition or fingerprint scanners, most systems now use biometrics to access apps and unlock data.
Today, companies offer many biometric authentication options for consumers. Most methods make it easier to process digital payments through fingerprint scanning and facial recognition.
Many businesses now support contactless touch ID payments through facial recognition.
So, what are biometric payments? Let’s find out:
What Exactly Are Biometric Payments?
Biometric payments refer to a payment method that utilizes an individual’s unique biometric information to authorize transactions. Biometric data revolves around facial recognition, fingerprint scanning, iris scans, and voice recognition. Other biometric authentication methods include retinal recognition, signature recognition, DNA matching, face recognition, and voice recognition.
Biometric payments are a convenient and secure alternative to old school payment methods. Biometric payment solutions are new tech that allows enterprises to optimize and streamline the payment authentication process through a POS terminal.
Biometric payment has managed to replace the old way of dipping and swiping cards. Biometric payments are lightning faster than traditional payment methods. For the most part, the most commonly used biometric methods are fingerprint scanning and facial recognition.
Fingerprint Scanning
Fingerprints have been used for decades by law enforcement agencies to identify people. But fingerprint scanning became accessible for consumers in the early 2010s. Smartphones now have fingerprint sensors paired with optimal scanners. Biometric payment cards work as EMV cards and feature an embedded sensor that companies use to confirm the identity of cardholders and process purchases.
Facial Recognition
Facial recognition uses infrared light to scan a face and then direct dots to authenticate a facial identity. With facial recognition, people can authenticate their payments by just looking at their smartphones. It is a smart technology that has become more mainstream and continues to get implemented by tech giants in the form of Apple Pay and Samsung Pay.
Mechanics of Biometric Payments
How do biometric payments work? Well, you can use a debit or credit card to make a biometric payment. There are many use cases for biometric payment solutions. Most companies use smart devices that have revolutionized biometric mobile payments. Let’s take a look at the quintessential elements that make biometric payments work:
Purchase Authentication
On every card, biometric data is collected and matched. The green light confirms that the transaction is authenticated through a payment processor. Authenticating a purchase requires a secure connection so that the device can transmit transaction details and card data. After that, a user can withdraw the funds straight from the cardholder’s account and deposit them into a different account.
Payment Initiation
As soon as you activate a card, you can make your purchase. Remember that most POS solutions accept biometric payments. It’s a simple process where the merchant asks the customer to use a specific payment device and verify their identity to process and complete the purchase.
Registration and Enrollment
You can reach out to a financial institution that uses biometrics to process payments. Once you get your biometric card, you can enroll your fingerprint on the payment card. It is how you securely store the card information in the chip.
Adoption of Biometric Payments
IBM’s research shows that the increased adoption of biometric technologies will continue for years to come. But payment system operators and stakeholders will have to pay close attention to key drivers to keep up with the new trends and address potential issues.
Biometric payment authentication has become a new standard and works around specific principles. In fact, there are many considerations and benefits that you need to take into account to understand the future of biometric payments.
Focus on fostering engagement and dialogue to ensure continuous adoption of biometric payment solutions. There should also be industry-wide support for interoperability and best practices around biometric payments.
Put in place a legal framework to ensure consumers are using biometric systems legally. The truth is that enterprises have to set an example to ensure a high adoption rate of biometric payment systems.
Many FinTech companies are at the forefront of using biometric technology to process payments. For instance, Visa and Mastercard now allow users to take care of payments through biometric Visa or Mastercard. In fact, Mastercard now allows users to make payments through palm and face recognition.
What Makes Biometric Payments So Advantageous?
Whether it’s for consumers or merchants, accepting and processing payments through biometric technology offers many benefits.
Convenience and Streamlined Checkout
One of the perks of biometric technology is contactless payments that are faster than traditional dipping and swiping of cards and then entering a PIN. With biometric payment solutions, companies are now creating highly efficient payment experiences. In fact, biometric payment systems are helping companies improve their brands, process a high volume of transactions, and serve more customers.
One of the perks of accepting biometric payment is that it offers added convenience and flexibility for consumers and businesses. The digital native generation prefers easy and fast payment options. With biometric payment, you can check out through facial scanning or fingerprint scanning on the go.
Robust Security
Laptops and smartphones now use biometric technologies. Similarly, biometric payments locally store your data. Biometric work around EMV cards that feature NFC technology. It is a perfect way to prevent fraudulent activities like hacking and data exploitation.
Each individual has unique biometrics which makes them incredibly secure to process a wide range of transactions. So, if you lose your card, hackers still won’t be able to use it without your original fingerprint, which reduces the risk of hacking and fraud significantly.
Industry Support
Every time a new technology enters the picture, there’s usually skepticism and reluctance by the leading players in the market. But leading companies like Mastercard and Visa now have dedicated research and development departments and use extensive resources to improve their biometric payment solutions.
Lower Costs
Biometric card payment works as a contactless card, which means businesses don’t have to buy expensive additional hardware. With contactless payments, you also don’t have to worry about hidden or extra charges. In comparison, biometric payments cost less than debit and credit card transactions.
Limitations of Biometric Payments
- While you’ll find a lot of benefits attached to biometrics technology, there are some limitations too. For instance, biometric technology is secure within used databases, which can lead to cyber attacks.
- Like other forms of payment, companies have to be at the top of their game to prevent fraud and put in place solid safety measures.
- When it comes to the biometric payment landscape, players with ulterior motives often creep in and exploit the technology.
What Lies Ahead for Biometric Payments?
While biometric tech systems continue to evolve, biometric payment authentication is relatively new in different markets. In any case, there is a dawn of a new era for biometric payments. There’s a significant increase in demand for advanced contactless payment system solutions. In fact, the biometric tech market is expected to reach more than $80 billion in the U.S. alone by 2027.
On a global scale, you’ll see biometrics used to authenticate over a trillion payments in the coming years. If you want to follow the tide of success and be relevant in the market, embrace new payment methods like biometric and contactless payments. These methods render help merchants and retailers consistent growth and achieve high customer satisfaction.
In the next stage of biometric systems, it is paired with open banking. Companies now roll out biometric payment cards embedded with a fingerprint sensor that can automatically verify your identification. In the realm of behavioral biometrics, you can even identify users through their keystroke patterns and movements.
Summing Up
The fact is that biometric and payment technology is evolving quickly and it is getting difficult for merchants to keep up with the changing dynamics and increasing consumer demand. Still, the benefits of using biometric payment solutions outweigh its limitations.
Advanced biometric payment solutions are convenient, secure, and safe, and can streamline online purchases. Many businesses are not adopting different payment methods that are integrated with state-of-the-art biometric security. Ultimately, biometric payments are a highly innovative and new approach to processing transactions and have a significant edge over conventional payment methods.
