The use of biometrics in payments

The banking and financial services industry has been exploring authentication of identity using biometric verification for a number of years

The goal has been to develop intelligent payment and banking applications to improve operational efficiency, combat fraud and penetrate new markets. Some of the innovative technology deployed to date includes the use of fingerprint sensors in mobile phones, finger vein readers in ATMs and voice recognition software for account access.

Emerging European markets such as Poland or Turkey have shown a greater willingness to embrace biometric technologies than their Western European peers. In Poland for example, one banking service provider has launched a shared ATM network allowing users to withdraw cash with finger vein biometrics.

In Western European markets, a successful existing payments framework plus concerns over privacy and secure biometric credentials storage, have contributed to slower adoption of the technology. Nevertheless, there are signs of a gradual evolution. A WorldPay survey indicated that 49 per cent of European consumers would like to see biometric payments emerge as a payment technology alternative.

In a new effort to move away from the use of passwords, Barclays is to introduce voice recognition for users of its telephone banking service as well as finger vein biometric scanners. The voice recognition system will verify customers based on their speech patterns and will be offered initially to Barclay’s Wealth customers, and then to the rest of its 12 million customers early in 2015.

In the US, certain banks have piloted voice recognition software for use in mobile banking, although adoption of such initiatives is slower in comparison to its European counterparts. Developments in smart phone technology such as Apple’s iPhone 6 however, could mean the use of biometrics in payments is set to increase. NFC support and a fingerprint sensor are built in to the handset, enabling payments at terminals which support NFC connectivity. In addition to this, Apple have recently filed patents to extend the use of biometric data beyond the handset itself. The patent would allow for fingerprints stored on one device via Apple’s Touch ID sensor to be uploaded to the cloud. This data could then be synced not only with other devices but also point of sale systems configured to purchase items via Apple Pay. Fingerprints at POS would be validated against those stored in the cloud to authorise purchases. Consumers are often slow to adopt new payment products. However Apple’s market share and market reputation as well as the fact that the product is already integrated with an existing payments ecosystem could mean higher rates of adoption if Apple Pay is made available in enough merchant locations to gain critical mass.

With fraud losses on UK cards totalling £247.6 million between January and June 2014, the addition of biometric data for identity verification would no doubt be welcomed by banks. However it should be remembered that voice, image and fingerprints are publicly available and could be cloned, with different levels of effort. Therefore deploying biometric technology should be considered as part of a multi-factor authentication strategy by industry.