Biometric Payment Cards - Where Are We Now?
In 2018, we wrote: “Biometric smart cards are emerging as the next innovation in payment cards.”
Jump forward a year and NatWest called biometric payment cards “the biggest development in card technology in recent years” when announcing its pilot of the technology.
It is staggering how far the market has come in only one year as banks, retailers and consumers recognize the value the technology can bring to our daily lives. Pilots are in progress around the world, commercial roll outs are happening and some of the biggest companies and organizations around the world are backing the technology.
Below are some of the key milestones from the past couple of years as we march towards a world where biometrics are enabling more trust and convenience for our card-based payments.
Pilots & Trials Around the World
2018 saw the technology go from lab to trial. 2019 moved it to next phase of pilots in both debit and credit cards, and the first commercial deployment.
There are now more than 20 pilots of contactless biometric-enabled cards in progress around the world, from North America and the Middle East to Europe and Japan. All of them using Fingerprints technology.
2019 saw the world’s first volume order of fingerprint sensors for dual-interface payment cards placed by global digital security leader Thales, in addition to the UK’s first biometric payment card trial announced from Royal Bank of Scotland and NatWest with a mission to scrap the £30 payment cap.
Ending the year with a bang, Swiss Corner Bank announced the launch of the limited edition Cornèrcard Biometric Gold, the first commercial launch of its kind enabling users to make high-value contactless payments.
Awareness of the benefits of biometrics is clearly growing, with banks, retailers and consumers recognizing the value of improved customer experience and reduced payment friction. In addition, banks can reduce fraud and foster trust to retain and attract customers while retailers can maximize throughput and reduce drop-outs, increasing revenues.
Most importantly, consumers no longer need to compromise security in the name of convenience, they can have their cake and eat it!
Rock & enroll!
Defining the process of registering fingerprints onto cards is a crucial element in getting biometric smartcards to consumers. In fact, 83% of issuing banks we interviewed cited enrollment as the most important thing to get right.
With this in mind, we set out to define a straightforward and secure solution with UX design specialists BlockZero that we launched earlier this year. Our ‘out of the box’ enrollment concept provides an easy, secure (and dare I say ‘fun’!) way to register your biometric data! See what we mean on our YouTube channel.
Of course, this is just one scenario and we are working with the industry to explore a range of in-branch and at-home enrollment options to meet the needs of every consumer.
With a lot of focus on PSD2’s mandate for the implementation of SCA (or, to those unfamiliar, Strong Customer Authentication) in 2019, biometrics is set to play a big role in muscling up banking’s authentication. The European mandate and its implementation by banks has stirred a lot of discussion across the continent – especially in the UK.
It’s great to see the fruits of years of work filtering down to consumer end points. PSD2 aims to make consumers’ lives and services better, and SCA is just one example of the regulation in action. But some consumers are already seeing every fifth contactless transaction rejected to force an authentication, creating confusion and frustration at the point of sale.
Biometric payment cards offer the perfect answer to SCA requirements. By adding strong authentication to the ‘tap’, consumers can benefit from greater security without harming the user experience of contactless. Or slowing throughput time for merchants!
When introducing new solutions and services, aligning a bank’s transformation strategy with the desires of consumers is an interesting chart to plot. Following our consumer research, we set out to understand how the opinions of banks compared - including understanding the importance placed on biometrics and why.
The one thing that everyone can agree on is the importance of contactless payments. Both banks and consumers consider them to be the most important payment method. Whether this is through a card or a mobile, the days of mag stripe (and, dare I say Chip & PIN!) are numbered.
88% of the banks we spoke with agreed that contactless is the main payment priority in the coming years.
However, there is one striking difference between consumers and banks when it comes to contactless payments. For the banks, the biggest issue with contactless is being able to lift the payment cap, but security is consumers’ main concern.
38% of consumers see security as key barrier to using the technology, with 51% being worried or very worried about fraud.
Introducing biometric payments can help address consumers’ security concerns while empowering banks to finally lift the payment cap. The widespread proliferation of biometrics for smartphone authentication means consumers are comfortable with the technology. Plus, with added security, it can finally enable those high-value contactless payments, creating a win-win for both banks and consumers.
All stakeholders now recognize the value of biometric cards. Consumers want the technology, the largest card manufacturers are driving implementations forward, and banks around the world are prioritizing biometrics in their roadmaps and those in pilot have the ambition of scaling up to a commercial launch, which Crédit Agricole in France has stated as their goal in 2020.
But how fast will biometrics be adopted for payment cards? No one really knows, but it’s interesting to put it in perspective and to consider the historical adoption rate of new technologies in the payment card area. Chip & PIN smartcards were introduced around 1995 and reached one billion cards about 18 years later, then came contactless cards in 2007 and took about 8 years to reach one billion cards. In both these cases the payment terminal infrastructure had to be upgraded, at a major effort and cost. For biometric cards to take off this is not necessary however as they already work in today’s contactless or contact-only terminals. Therefore, the roll-out might be faster this time around. In 2020, all POS terminals will be contactless, which is also an important driver.
Standardization and certification efforts are in progress and this will be the final, fundamental step before widespread commercial implementations. Fingerprints is working with the ecosystem to support the development of specifications and test plans to ensure the functionality and security of this technology is testable. With this in place, the technology can be implemented in an assured way, enabling it to go from strength to strength.