Mastercard recently announced it is trialling a new biometric card that will allow businesses to offer consumers the opportunity to pay via biometric services through an app. It’s a conversation that’s been on the radar for some time now, particularly as a means to eradicate the need for passwords. And it’s not a bad idea in theory. HSBC found that fraud was reduced by 50% when using a voice authentication system for customers. What’s more, Mastercard’s trial promises the ability to speed up payments, reduce queues, and offer more security than a standard credit or debit card.
by Ashish Bhatnagar, Client Partner, Cognizant
With such benefits on offer, it’s not surprising that the biometrics market is expected to be worth $18.6bn by 2026.
Though the question must be asked as to whether we are hyping yet another technology up a little too much too soon. Biometric payments, still very much in their infancy, in my opinion, have a long way to go before becoming mainstream, with several obstacles to overcome first.
Prepare to fail
Facial recognition, while of course a huge innovation and one that has changed the game for many use cases, is not without its problems. As most of us have now come to realise, it’s not perfect and our recognition systems continue to fail to work 100% of the time. While error rates are now less than 0.1% – a seemingly low percentage – it’s one that translates into potentially thousands of transactions when considered on a global scale.
To reduce the chance of failure, companies will need to have access to several different forms of authentication, such as fingerprints, vein patterns, iris scanning, facial recognition and more to offer multiple options when consumers experience problems. While reducing the risk of errors and fraud, each system has its own accuracy rates and problems that firms need to be aware of. For example, facial recognition can sometimes be thrown off by glare from glasses, and vein pattern relies on high-quality photos in the first instance and ensures that subsequent scans are not affected by different light conditions.
Unfortunately, though, the issues with biometric data and systems don’t end with our phones occasionally not recognising who we are mid-yawn. For example, its use by police establishments has been a huge cause of concern for citizens, rightly worried about unknown entities having access to so much of their personal data.
The ultimate trade-off
And that is perhaps the biggest obstacle to overcome in order to make biometric payment systems mainstream. The trade-off for consumers to ensure they are a success is that companies will have to have access to an increasing pot of every individual’s personal data. There’s no compromise here; personal data is simply fundamental to how the technology operates.
Such a big concern for the increasingly data-aware citizen means high stakes for any business wanting to get in on the biometric payments action. For instance, while a data breach today may result in passwords and usernames being leaked, this information can be changed and updated relatively quickly and easily. Biometric data, unsurprisingly, is impossible to change.
And it’s not just bad actors in the cyber world that consumers are or should be worried about. Sharing such sensitive and personal information with global corporates, should never just be a given especially for those which aren’t clear on how that data will be used. For example, in countries with less protection for individual rights, such as China, the facial database could be used to identify and target certain groups of people by the state authorities, as has already been seen with the Uighur people. If the public becomes distrustful and refuses to share information with payment firms as a result of such events, any biometric technology beyond just unlocking a smartphone will struggle to get off the ground in a meaningful way.
It’s down to businesses and governments to overcome these concerns by putting the appropriate regulations and processes in place that protect consumer data and put their minds at ease. This will help build trust in new technology. What’re more governments around the world need to be communicating effectively to create conformity across countries on how data should be handled and secured. Firms in turn will benefit from being able to focus on one set of rules, in the knowledge that the rights of people in different locations are being protected.
Who foots the bill for biometric payments technology?
Beyond consumer concerns, there’s an issue of cost. New technology doesn’t come cheap – so who’s responsible for paying for the new devices that will be required to make biometric payments a reality? We’re talking billions; at the moment some high-end biometric systems can cost up to $10,000, a significant and completely unrealistic cost for small business owners.
And for what? While biometric payments may well make things a little easier and quicker for consumers, it won’t win or lose their loyalty when they can just pay by other means, so there’s simply no ROI. Only when it becomes an expectation of consumers, instead of simply a novelty, will it become important for companies to jump on the bandwagon. But that could take years, at least until the technology becomes an affordable price where it is feasible for companies to make this investment. Until then, widespread adoption is a distant notion.
We need to take a step back
There’s no doubt that schemes like Mastercard’s will crop up more frequently – innovations like these are part and parcel of today’s digital world and it’s exciting to see what the future could look like. But the point here is that, once again, we’re getting a little ahead of ourselves. Privacy issues, in particular, prove a huge obstacle, not just to payments, but to all other systems attempting to make use of biometric data. The regulations required to fix the issue could take years to get right.
So, just like we won’t see flying cars zooming overhead tomorrow, biometric payment systems have a long way to go before becoming mainstream.