The case for biometrics
Fraud and how to combat it remains a hot topic in the payments industry. New figures from UK Finance confirm a rise in the use of credit, debit and charge cards. Transaction volumes grew 12% for the year up until the end of June. This is the highest annual growth rate since 2008. But card fraud has also increased every year for the past five years, reaching £618 million in 2016. This is why the payments industry is urgently exploring new ways to combat fraud – and biometrics is their hope for the future.
Unique physical characteristics such as fingerprints, iris scanning, voice or face recognition are used for cardholder authentication. These measures follow Apple’s launch of Apple Pay via Iphone and its ITouch fingerprint authentication technology.
All may not be what it seems
Take a look at the headlines and it appears that consumers are also looking forward to biometric authentication. First Direct and Barclays both launched voice recognition for their telephone banking last year. Atom Bank asks customers to provide two forms of biometric data for security – one of which can be face recognition. Card issuers are also looking to utlise biometric security on new cards. Mastercard unveiled its trial of embedded fingerprint technology in April this year and other payment card providers are expected to follow suit.
But all may not be what it seems. The BBC reports that some consumers fear the security of biometrics could be breached, even though it’s the issuing banks not consumers, who would be liable. This could be just the tip of an iceberg that fintech marketing and the entire payments industry needs to navigate.
Authentication means pain to consumers
Long ago, a signature was all that was required to authenticate a cardholder. Fraudsters had fun for a while but were dealt a body blow with the introduction of Chip & PIN technology in the UK. The UK Cards Association recently published data to mark its 10th anniversary that showed annual counterfeit card fraud losses dropped £81.9 million between 2004 and 2014. That’s good news for the industry and consumers who would otherwise indirectly foot the bill.
But look at it from the consumer perspective. Consumers, especially pre-millennials, have inadvertently been conditioned to understand that security means complexity. It means inconvenience. They used to simply sign a piece of paper to verify their identity for card purchases in stores. Then we made them remember a PIN number. Online shopping became far more complex with Verified by Visa and Mastercard SecureCode requiring additional passwords that consumers regularly forgot. Secure was never easy.
Too simple to trust?
So if cardholders think that authentication must be complex, are biometrics too simple to trust? It’s likely to present a barrier to some consumers and take time to break this long-held negative association.
The goal will always be to make cardholder authentication seamless for the consumer while minimising fraud exposure for the card Issuer. Get the balance wrong and consumers vent their frustrations by dumping their virtual shopping carts in front of heartbroken retailers.
The industry know that the move towards invisible payments demands that authentication also becomes invisible. But when we see research showing that 56% of people online would prefer using biometric security to traditional options like passwords to access financial accounts, spare a thought for the other 44% who we’ll need to work hard to win over.