Paying with facial recognition or the palm of your hand: is it a reality or just a future possibility? Jean-Philippe Niedergang, Group CCO – EMEA CEO of Castles Technology, explains how biometrics is shaking up payment and customer experience.
The use of biometrics as an identification tool is not new; it dates back to ancient times when fingerprints were used as signatures and seals. Application in payment technology is what makes it revolutionary. However, there is a gap between expectations and reality.
Since 2010, there has been an acceleration in this trend, primarily in the use of smartphones, while the fintech sector is still in the testing phases today. Although skepticism is strong in France, some players have already started to innovate in this field.
Biometrics at the service of innovation
The use of fingerprints as a means of verification on smartphones has encouraged the development of biometrics in fintech. According to a survey conducted by Visa , 79% of French people trust biometrics as a secure means of authentication, and according to the Groupement des Cartes Bancaires (CB), 52% of French people would prefer to use their fingerprint instead of their PIN code.
With a biometric card, it is enough to place a finger on it to validate a transaction without a limit as long as it is pre-authorized. Because, today, the card’s biometric data are stored securely on the chip, rather than sent to the banking servers, or communicated to the merchants.
The future of payment
Facial recognition, fingerprints, eye scans, and handprints are some of the innovations expected in the payment market.
According to a study by Dentsu Data Lab, conducted in 14 countries in 2021, 81% of respondents would be willing to use fingerprints instead of PIN codes. This innovation could improve the customer experience, which is today, a continuous challenge for merchants.
By using a totally personal and irreplaceable mechanism, biometric payment will significantly reduce fraud at points of sale and allow for greater efficiency in the automated payment process by reducing waiting times for customers.
If today, mobile wallets in their various forms are a trend, the arrival of biometric payment terminals constitutes a real disruptive innovation in the market. However, the development of this type of technology does not only concern payment terminal providers but also banks.
A future full of challenges
Biometrics face three challenges: cost, security, and data storage.
It is clear that the biometric card incurs an additional cost for the consumer, in terms of price, but there is also a cost for the merchant due to the transformation of payment terminals.
From a security standpoint, this form of verification is much harder to hack than a four-digit code. However, the risk that irreplaceable biometric information could be obtained by hackers raises doubts among consumers.
The storage of this encrypted information raises questions in the evolution of biometric payments. Who should be responsible for ensuring the security of biometric information, the bank or the payment terminal provider? This issue largely depends on the trust of the users.
The contactless biometric payment card is currently the only biometric payment method on the market, but its evolution towards other formats such as the pattern of veins on a hand or facial recognition is expected to be the next step. The biometric technology already used in smartphones and its level of acceptance show that the consumer market is ready to engage in this new innovative era in the financial sector. It is undeniable that biometric technology brings safer identification and an improvement in the customer experience to the payment sector
About the author
Jean-Philippe Niedergang is Group CCO – EMEA CEO of Castles Technology, a global payment industry leader with solutions for financial, retail, hospitality, transportation, gaming, petrol, travel, and vending sectors. Created in 1993, the company has grown exponentially over the years and continues to leave a global footprint. Headquartered in Taipei, Taiwan, Castles manages its business across 50 operating countries and 4 geographic regions – Asia, North America, LATAM and EMEA to support global markets.
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