What Do Biometric Payments Mean for the Future of Purchasing?
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Over the past year, biometrics-based systems have been popping up everywhere in the travel industry. From scanning your face to drop off luggage to using your fingerprint to make it through the TSA line, faces and fingers are quickly replacing the need for your ID card and your passwords. They’re also going to change the way that you use your credit cards. Earlier in 2018, Visa announced a biometric-based credit card for contactless payments via a pilot program with two financial institutions, Mountain America Credit Union and Bank of Cyprus.
The card looks like a standard chip-enabled card, but there is a tiny fingerprint sensor on the right hand side of the card with verification abilities that eliminate any need for signatures or PINs. I caught up with Mark Nelsen, senior vice president of risk and authentication products at Visa, to learn more about the program and how biometrics will shape the next generation of physical and digital credit card purchases.
What the Immediate Future Looks Like for Cardholders
For credit cardholders at the two pilot institutions, the biometric-based payment system requires an additional step that many of us rarely do anymore: actually go to the bank. “For the pilot program, customers have to go to a branch to enroll and scan their fingerprints,” Nelsen said. “But in the long term, customers will enroll fingerprints at home. For wide-scale adoption, customers will not have to travel to any bank location to use.”
Nelsen said that the goal of the pilot is to validate that biometrics can work in all the right scenarios. “It’s all about usability,” Nelsen said. “We want to make sure that the sensor doesn’t break and that cardholders actually like it. Once those are checked off, I think we’ll start to see more biometrics-based payments, but it will take some time until this is widely available.”
One of the reasons that most cardholders won’t be adding new fingerprint-enabled cards to their wallets is cost. Nelsen said that the cost of each of these cards is anywhere between 5 and 10 times more than a normal card. If the pilot goes well and more clients express interest in it, those costs will start to come down.
Will We Even Need Credit Cards Anymore?
If customers can scan their fingerprints on a card, I started thinking about whether physical cards are even necessary. Why not ditch plastic altogether in favor of fingerprint-based payment terminals? Nelsen said the technology does exist, but it’s not likely that they’ll start appearing at retail locations. “The merchants have to pay for those terminals,” Nelsen said. “With millions and millions of those terminals, it’s hard to justify that cost.”
Nelsen pointed out that merchants wouldn’t be the only ones concerned about a shift to scanning fingerprints instead of inserting cards. “If you go into a store and put your fingerprint on a scanner, the perception is that the merchant has your fingerprint on file,” Nelsen said. “Most customers don’t like that, so we don’t see that as a viable option anywhere in the world.”
Good point. I don’t exactly want CVS, Target, Whole Foods or any other retailer to have knowledge of what makes me unique as a human being. However, Nelsen pointed out that customers are very interested in biometrics under one condition: The verification needs to happen on their devices. Consider mobile apps like Marriott or Chase where your thumbprint — stored on your phone — syncs with the company’s verification system. As more of us grow accustomed to that experience, Nelsen believes we’ll be comfortable with the same system while checking out and paying for purchases online or in-person.
What’s Happening Outside the US?
Fingerprints aren’t the only road to the future. Consider those already using their faces to unlock the iPhone X. Could the same type of system happen with your credit card? “Facial recognition could catch on,” Nelsen said. “It’s already happening at some banks.”
All those banks, though, are outside the US. In the U.K., Lloyds customers can use their faces to log in to their bank accounts. Customers at HSBC can actually open accounts by taking a selfie. In China, customers using Alipay can buy KFC with their faces.
“The real question,” Nelsen believes, “is whether [facial recognition with financial institutions] can happen in the US.”
What do you think? Would you trust banks and credit card issuers to know the color of your eyes and the arc of the lines on your fingers?
Featured photo by Dave Kotinsky/Getty Images for Visa
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