Beyond biometrics: do fingerprints represent a blueprint for the future of payments?

The Biometrics Institute predicts that the development of biometrics over the next five years will shift towards online identity verification, government mobile applications, online payments, e-commerce, and healthcare.

Biometrics has been viewed as a secure method for financial transactions and security in many walks of life, with fingerprints used for clocking in at work or verification for contactless payments, but the institute’s research suggests there are further user cases set to emerge in the coming years.

And, it comes as no surprise for those studying the market closely. The global technology powerhouses, such as Microsoft, Apple and Samsung, are strong proponents of using biometric identification for PC, laptop or mobile access purposes and, as consumers get used to this way of engaging with tech, it naturally paves the way for fingerprints and iris scanning in payments.

The case for businesses and consumers

Various technology companies and card schemes argue it’s a secure way of paying, and with the likes of Apple Pay, Android Pay and Samsung Pay mobile payment solutions already using biometrics as part of their authentication process, there could be calls for more to come.

Companies like Starbucks utilise mobile payment providers like Apple Pay within their apps, meaning with the tap of a thumbprint money can move from bank account to Starbucks account, and subsequently be used at the point of sale. The simplicity of it continues to strike a chord with consumers, as the coffee chain’s latest figures show its Starbucks Mobile Order and Pay service represented 12% of US company-operated transactions in the three months to 1 April 2018.

Then there’s the Amazon Go effect to consider. As the online titan looks set to add more checkout-less physical stores to its inaugural offering in Seattle, enabling frictionless transactions without the need for shoppers to queue or visit a fixed cash desk or till, it will shape consumer expectations.

If this momentum continues and Amazon drives sales through these stores, you can imagine strong arguments from consumers for further installations of this type of technology in convenience retail – and one way of supporting speedy and secure transactions is through use of biometric identity.

Finger, face or eye scanning are all seen by industry analysts as ways to improve the authentication phase of payments for the consumer, while helping tackle growing fraud levels in retail and hospitality, and protecting customer information.

But biometric scanning isn’t fool-proof and can only be part of the identity solution, especially when being used to authenticate higher values purchases, for instance.

This means business considering adopting body-scanning payment methods need to be mindful of the trade-off between security and user-experience – and this requires a fine balance between how many false positives and false negatives are allowed in order to process a payment.  Too many false positives pose a security risk but, at the same time, too many false negatives could lead to a legitimate shopper not being able to authenticate a payment, resulting in poor customer experience and possible purchase abandonment.

A balance that provides the right level of convenience but mitigates against the risk of mis-authentication will be key to successful biometrics payments solutions.

Choice trumps any individual payment type

At any event we attend the clear message is there’s no silver bullet when it comes to retail or payment technology.

Whether it’s mobile payment, buy-now-pay-later schemes, card and cash payment, crypto-currencies – or anything using biometrics in some way – they key for retailers is to know what their customers want and offer the relevant payment options. Businesses need to be sure that having helped navigate a customer to the all-important point of purchase they don’t lose them because they don’t offer the most suitable method of payment.

Therefore, retailers should be investigating biometrics usage as part of their suite of payment options, because the most forward-thinking organisations know they need to provide choice at the checkout.

Mobile support

It is clear mobile is very much at the heart of a lot of the innovation going on in the payment space, playing a fundamental supporting role for many of the new transactional options.

With Deloitte predicting that, by the end of 2023, 90% of adults in developed countries will have a smartphone, it’s obvious why tech companies and innovators in the payments space are targeting that piece of metal that sits in our pockets as a platform for their new solutions.

In the last 18 months the conversation in the financial world may have veered towards crypto-currencies and open banking, but before it becomes clear what impact these or, indeed, biometrics have on the overall landscape, we can be near-on certain that mobile will be central to it all.

As for the evolution of biometrics, fingerprints are already playing a key role in mobile payments processing, but in the future this could be usurped as the most dominant form of biometric payment.

Delving deeper into the Biometrics Institute research it appears facial recognition dominates as the biometric most likely to rise in popularity for businesses over the next few years. That is closely followed by a multimodal – a combination of two or more biometric forms – and then iris.

It’s certainly worth keeping an eye on how this all impacts retail payments in the not-too-distant future.

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