Payment fraud is a major issue for the payment industry. According to a survey, the risk of fraud in the payment industry is a major concern for 44% of companies in the financial sector, a 14% increase from the last year. While faster payment processing is the second major concern for survey participants, about 37% outlined this issue. Countries or businesses that have already implemented secure payment technologies can appreciate this concern as well.
Anything that can reduce the impact of fraudulent activities, will boost confidence in the payment marketplace and ensure safe transactions. Biometrics has the potential to both fight fraud and making payment faster. Isn’t it fascinating that in the digital world where no physical presence is required, your body parts become your identity?
Passwords are Outdated: Biometrics goes Beyond
Before discussing how Biometric Authentication can benefit the payment industry, let’s look at the current security features in the payment industry. Even though businesses are adopting biometric verification as a security measure but still Two-factor authentication (2FA) and passwords/PINs are the most common security measures.
Let us have an idea about how these two work. While smartphones are most usually used for digital transactions, so two factors in 2FA are ‘something you have’ and ‘something you know’.
Something you know is bank account information including user password or PIN. And something you have is a security token normally an OTP (One Time Password), that is sent to your phone. On the other hand, passwords halt the security of your payment on a single password. It is inevitably weak, no matter how strong the password is.
While Two-Factor authentication is good and secure but there are still issues. Firstly, it requires adding credit card or bank account information, which fraudsters could easily access using man in the middle attack or some other trick like spoofing. Forgetting a password or Pin is also a concern. Then there are people who hate passwords as it is difficult to remember them.
This is where Biometric verification can bring improvement. By replacing ‘something you know’ with ‘something you are’. It uses physical characteristics to verify your information by linking it to your identity. Biometrics technology can use several physical features for recognition such as fingerprint, facial, voice, and iris. The most common are fingerprint verification and facial recognition and some insiders predict that iris will also be a common recognition type in the coming years.
Studies indicate that MFA (Multi-Factor Authentication), which includes an extra feature added to 2FA i.e. Biometric verification, can block 99.9% of malicious attacks. Using a biometric system for payment has many benefits. Particularly, biometrics are unique to each consumer so chances for forgery and frauds are close to zero. Moreover, biometrics are always available to you wherever you are. This reduces the need to remember passwords.
Biometric Security streamlines User Experience
While passwords and 2FA could only secure. Biometric verification not only enhances security but also provides a seamless user experience. It removes the need to remember passwords, which is a huge improvement in user experience. In addition, it also makes the payment process faster.
Current Status of Biometric technology in Payment Sector
Biometric verification is not new. Several banks, online businesses, and financial institutions are making use of this technology for at least five years. But it is considered as an optional choice. There are third-party service providers that offer biometric verification solutions.
Solutions such as fingerprint, facial recognition have made it easy for companies in the payment sector to easily verify customer information using accurate biometrics. Many players in the industry are using these services to gain a competitive advantage.
According to a Juniper study, biometrics will authenticate $2 trillion worth of transactions, by 2023.
Be it facial recognition, fingerprint authentication or iris scan, Biometric verification is going to revolutionize the payment sector. Especially, the need to avoid fraud and enhance user experience is paving ways for technology like biometric verification. Experts predict that biometric authentication will be the most used method for identity verification in coming years.