Does the future of credit cards lie with biometric authentication?
Biometrics are increasingly becoming a part of everyday life. Just look at our smartphones. If you have bought a phone in the past few years, chances are it utilises biometric technology, either in the form of fingerprint, iris or facial recognition. Aside from smartphones, you will see biometric recognition being used at border control when you travel. You may also see it used in the workplace, where biometrics are being introduced to monitor employees as they clock in and out for the day. And of course, law enforcement agencies have long used biometrics to find and identify criminals.
Given the proliferation of biometric technology currently in use – and the money being thrown at its advancement around the world – it’s not a case of if we will see more biometric integration into our everyday lives, it’s a case of how soon will it happen, and how far will it reach.
When it comes to the payments industry, biometrics are already being put to work. We already mentioned biometrics being used to access digital wallets – but what about credit cards? In case you didn’t know, there is such a thing as a biometric credit card. While it may still be in trial phase, the biometric credit card is working hard to keep up with digital wallet advancements. Indeed, it is perhaps because of the development of digital wallets that the credit card industry is trying to up its game with a little biometric integration.
So, what does the biometric credit card have to offer? In this article, we’ll take a closer look at biometric technology and how it is used, to then talk about where it could take us in the future, both in terms of everyday life and in the way we pay.
What is biometric technology and how is it being used?
The term ‘biometrics’ may seem a bit intimidating, but it’s actually pretty straightforward. Biometry is the application of statistical analysis to biological data – so when we talk about biometrics, we’re really only talking about calculations and measurements of the human body.
By measuring a person’s unique physical and behavioural characteristics, we can use them for identification purposes. That’s what biometric authentication is. Typically, we use markers for identification that can easily be scanned, recorded and compared, such as a fingerprint, voice or iris. However, as the technology advances, biometrics can also be used to identify someone by their heartbeat, gait or how they type.
Smartphones offer an excellent example of how biometrics have been adopted into everyday life. You think nothing of using your fingerprint to unlock your phone, log in to your banking app, or make a payment via PayPal. If you have a newer iPhone, you may do all that using facial recognition, or if you have a Samsung, with iris recognition.
Coming off the back of that, Mastercard introduced its ‘selfie pay’ or Mastercard Identity Check, which basically allows you to authorise the purchases you make online using your phone’s facial recognition software.
But of course, biometrics reach further than your smartphone. Unless you work in law enforcement, you probably first saw biometrics in use at the airport. But, while we are now used to having our fingerprints and faces scanned at passport control, the travel industry wants to take biometrics much further.
Over in the US, officials have been trialling a system where travellers no longer have to show their passport or boarding card as they make their way through the airport. Instead, all they need to show is their face. Cutting queuing time drastically, the system was launched in late 2017, and later rolled out in phases at the country’s busiest airports. By 2023, this is expected to be standard for 97% of all domestic US airline passengers (1).
Within the retail sphere, Amazon is making headway with handprint recognition, and is reportedly testing out a system on its employees where handprints will be used as a payment method. How does it work exactly? Scanners process and identify the hand being scanned, to then charge a credit card already on file. As long as testing goes to plan, the technology may be rolled out within its Whole Foods supermarket chain in coming months.
Sport is also getting a biometric overhaul. Take soccer for example. Biometric technology can now be used to collect real-time data on players, monitoring factors such as hydration levels, core body temperature, and respiration. Not only can this help players perform and train better, it could also provide trainers with vital information to help prevent injuries before they happen, or to replace players before excessive fatigue sets in.
How are biometrics being used on credit cards?
Having taken a broader look at biometrics and where they are currently being used, let’s focus now on credit cards. The biometric credit card is not new. Over the past few years, there have been several trials around the world testing out the technology to investigate its viability.
In 2017, Mastercard piloted a biometric credit card in South Africa with major retailer Pick n Pay and Barclay’s-owned Absa Bank. A similar trial took place in the same year with Italian bank Intesa Sanpaolo. In 2018, Bank of Cyprus released its own biometric credit card, and then in March this year, Visa got in on the act by teaming up with British bank NatWest, just as Mastercard signed a deal with Royal Bank of Scotland to offer its biometric credit card for the first time in the UK.
So, how does it work? A biometric credit card uses a combination of a fingerprint scanner and EMV technology. When you first get your card, you will have to register your fingerprint. You may be able to do this at home using your phone and a scanner, or you may need to visit your credit card provider to do it there. Your fingerprint is then encrypted and stored on your card.
When using your card, simply rest your finger on the small scanner embedded on the card as you tap the card or insert it into the card reader to make the payment. The card draws power from the card reader to activate the fingerprint reader, and if the reading matches the fingerprint data stored on the card, the payment will be authorised. Unlike contactless payments now, there will be no limit on the purchase amount, and it should work with any card terminal around the world.
Why use biometric authentication on credit cards?
For as long as there have been credit cards, there has been credit card fraud. And while card providers work hard to introduce new ways to combat fraud, criminals always find new ways to get round them. Biometric authentication is simply the next step in the fight against credit card fraud.
But of course, that’s not all biometrics can offer the world of credit cards. There is convenience to think of too. Time then to take a look at some of the ways biometrics could help both the credit card industry and credit card users.
A biometric credit card can better protect cardholder data
With a biometric credit card, the biometric data never leaves the card. The fingerprint reference data is securely stored on the card’s chip, and should never be kept on the card provider’s servers or elsewhere. This is similar to the system already in place with smartphone biometric authentication.
Using biometrics is safer than using a PIN
Just as using a PIN was safer than using a signature, biometrics is safer than using a PIN. Only you have your fingerprints after all. Worried that someone might try to duplicate your fingerprint to use that on the card? Additional safeguards are in place to make sure that can’t happen.
Biometrics could help rid the world of unsafe PINs and passwords
One of the main problems with PINs and passwords is that you need a unique one for everything. Unfortunately, the average human brain is not equipped to remember that many PINs or passwords, which means we may use the same ones or ones that are easy to guess. With your body as your password, remembering a string of PINs or passwords is no longer necessary.
A biometric credit card makes for easier payments
Anyone who has used contactless payments knows how convenient they are. You tap and you go. But, for payments over $100, you need to put in your PIN, which slows things down somewhat. With a biometric credit card, the process is as fast and easy as tap-and-go payments, but there is no limit to the purchase amount.
Ever used your credit card overseas without telling your provider where you were travelling? While your card may have been suspended until you could tell your provider that you were actually overseas, that shouldn’t be a problem with biometric credit cards. Your fingerprint tells your provider that you are the one using your card, no matter where you are in the world.
Biometric credit cards work with the existing POS structure
While this won’t affect you that much, it will affect the likelihood of biometric credit cards being introduced on a wider scale. Unlike Amazon’s hand scanner, which will require new scanners at each checkout, biometric credit cards work with the card readers that are already in place.
What may cause problems?
Where there is an upside, usually there is a downside. Here are some of the factors that may detract from the advantages biometric credit cards offer.
The security of the data
While the system currently in place should mean all biometric data is held within the card itself, there is potential for that data to be incorrectly stored, sold or stolen. Having your biometric data stolen could be a huge problem. After all, you can change your PIN, but you can’t exactly change your fingerprints.
Biometric data collection makes people nervous because of what could be done with it in the wrong hands. And by wrong, we don’t just mean criminals. Some organisations stand against biometrics because of the ‘Big Brother’ aspect, in that we are allowing our governments to hold so much of our data, which can then be used to track and, in theory, limit our activities.
In the end, it may come down to convenience. According to a new report (2), 80% of Americans “are okay with biometrics” being used to speed up and improve the air travel experience, especially at airports. If biometrics make using a credit card that much more convenient, card users may be more willing to put aside their fears of handing over their biometric data.
The cost for card providers
The cost of creating a standard EMV card is said to be about US$1-2, while a biometric credit card costs about US$20 to make. While the cost of new technology always reduces over time, this initial cost may prove to be a hurdle. Will the card providers suck it up? Or will cardholders pay more in their annual fees for the privilege of using biometrics?
Digital wallet competition
If biometric credit cards are more expensive for users, cardholders may choose to look elsewhere. With a digital wallet and a smartphone, users can benefit from biometric authentication on all their cards, not just cards with a biometric scanner – and they don’t pay extra to do so.
Where could biometrics take us from here?
Essentially, the world of sci-fi could indeed become our future. Think Minority Report but without the ‘precogs’. This is a world where our face and body are our identification; a world where instead of using credit cards and passports and driving licenses, we use unique biometric identifiers. This is a world where we use our iris as a hotel door key and our face as a passport, where the way we type confirms our presence at work and our vein patterns are used to pay the bill at lunch.
Biometric technology is being advanced every day. Whether it’s in the tiny batteries used within biometric credit cards to keep them charged for years at a time between uses, or the introduction of blockchain technology to paperless travel to allow travellers to choose when and where their biometric data is stored – things are definitely heating up in the world of biometrics. It’s simply a matter of how far the technology can be taken, and what obstacles may stand in the way.
When it comes to technology in general, each innovation is a step towards something better. Biometric credit cards may not have all the answers, but they could take us one step closer to something that does. It seems biometrics will make their way into the payments industry regardless of the way in which they are eventually utilised, with Visa estimating biometrics will be used for more than 18 billion transactions by 2021, growing 83.7% from 2016 (3).
One reason for this may be because the majority of consumers are ready to make the change towards a biometric payment solution, despite the reservations some may have about security. According to a survey (4) commissioned by Visa, more than 85% of the American consumers they surveyed were interested in using biometrics to verify their identity or to make payments. Not only that, 70% thought biometrics would make payments easier, while 46% believed they were more secure than using passwords or PINs.
How can you improve your credit card security in the meantime?
While it may be a while before you get your hands on a biometric credit card, there are ways you can make your credit card somewhat safer while you wait.
- Use a unique PIN for each card. Make it difficult to guess, and don’t tell anybody what it is.
- Be aware of where you are putting your card. Be on the lookout for credit card skimmers at ATMs and on card readers.
- Check your credit card statements regularly. If you see any transactions you don’t recognise, report them to your card provider for investigation.
- Be smart when using your card online. Only use trustworthy sites, never use public Wi-Fi when shopping online or accessing online banking, and keep your security software up to date.
- Don’t give out your credit card details to anyone. No legitimate company will call you or email you to ask you to update your credit card info. And of course, stay clear of any Nigerian princes that come a-calling.