A 3D visual of a fingerprint, representing biometric cards
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How biometric payment cards benefit banks

Technical Innovation
6 Mins.

Driven by an increase in the use of contactless payments, which has been turbocharged by COVID-19, biometric technology embedded in credit and debit cards offers a number of advantages

There are a number of things you can use to help validate someone’s identity, from the shape of an ear to a personal odor. These novel techniques are employed in biometrics – the measurement and analysis of an individual’s unique biological and behavioral characteristics. When it comes to payment cards, however, there is one characteristic that is fast becoming accepted by banks and their customers – the humble fingerprint.

Already widely used for identification and authorization in smartphones and laptops, fingerprint recognition technology is now starting to be integrated into credit, debit, and prepaid cards. Driven forward by a range of factors, including changes in regulation, technology, and user behavior, biometric payment cards represent a significant shift in the financial services industry.

The case for payment biometrics

In many economies around the world, the number of contactless card transactions is rising exponentially. A Mastercard study revealed a 40% growth in contactless transactions globally in the first quarter of 2020. Nearly eight in 10 people said they use contactless payment, and, largely due to its safety and convenience, 74% say they will continue to use contactless post-pandemic.1

At the same time, new regulation was bedding in across Europe. The strong customer authentication (SCA) requirement of the European Union’s directive on payment services (PSD2), which came into force in September 2019, includes the need for payment service providers to monitor and detect unauthorized or fraudulent transactions.

Biometric payment cards offer a number of benefits that complement these ongoing trends. For customers getting ever more used to the convenience of paying with contactless cards, biometrics add an extra layer of security. Users pay for their goods as with a regular contactless card, but the transaction is authorized by a fingerprint match. Crucially, research has shown that a fingerprint match is more secure than four-digit PIN. If a fingerprint does not match – i.e., when a card has been stolen – a PIN or signature is required to complete the transaction.

A boost for privacy

Woman using G+D biometric payment card for payment at a POS
Biometric payment cards combine security and convenience, while also opening up new revenue potential for businesses

The extra security enables benefits that go beyond protecting the user’s personal finances. The traditional limits on the size of transaction can be lifted, so consumers can pay for more things or higher-priced items with peace of mind. Improved privacy is another plus, as personal data is only stored on the card’s secure element. Card skimming – where data is fraudulently obtained from a card’s magnetic strip – is rendered redundant as a result.

For banks, retailers, and other players in the payments value chain, there are a number of advantages. Banks get to offer an improved customer experience, because biometric cards offer improved privacy and security – with the added benefit of convenience provided by technology that builds on an existing use case. The only extra step a customer needs to take in order to use a biometric card is to train their new card to register their fingerprint – this can be done quickly at home, on a smartphone, or in branch, by tapping the fingerprint on a sensor so a match can be created.

Retailers can continue to use existing POS infrastructure as biometric cards work on the same terminals used to accept payment by contactless cards and smartphones. What’s more, they could expect to experience more, happier customers, given that biometric cards speed up the payment process and shorten waiting times.

“88% of respondents want their banks to upgrade their contactless payment cards to support biometrics“

New revenue potential

There is an additional upside. While removing contactless limits opens up the potential for an increase in spending, banks could also charge their customers for using the service. When asked how much they would be willing to pay for contactless payments with no upper spend limit, over 87% of survey respondents said they would be prepared to pay a monthly fee. The majority, 42%, said they would pay between £2 and £5 per month.

The survey, carried out by Goode Intelligence in partnership with global technology leader G+D, shone a light on what consumers in the UK think about biometric cards. The results were positive, with 88% of respondents confirming they wanted their banks to upgrade their contactless payment cards to support biometrics.

These wishes could soon become reality, as there is a growing list of banks that have trialed the technology. G+D teamed up with global semiconductor company NXP and security and identification specialists Linxens to pilot biometric cards at French bank Crédit Agricole. An impressive 83% of customers who took part said they found biometric authentication simpler than a PIN, and 91% found it to be more secure. For payments above €30, the limit of a regular contactless card without the usage of a PIN, customers increased their use of biometric authentication from 15% of the time at the start of the trial to 44% by the end. Crédit Agricole hopes to start a commercial rollout in 2021.

As consumers start to adjust to a post-pandemic world, the arrival of biometric payment cards looks timely. A combination of contactless technology, greater privacy and security, and the simplicity of a fingerprint could be a win-win for banks and their customers.

  1. “The move to contactless payments,” Mastercard, 2020

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