Mobile Biometrics: Scaling Payments Security

Consumers want convenience but they demand security. Biometric authentication is positioned to couple these two ideas in a way that facilitates seamless payments.

M-commerce made up 60% of total global ecommerce in 2017—a 40% increase over 2016. Mobile proximity payments are also on the rise, topping 55 million users this year. That number is projected to increase to almost 75 million within the next four years.
As the use of smartphones for payments becomes more ubiquitous, consumers also have heightened concerns about security. Emerging payments technologies along with regulations meant to keep all payments secure have created a litany of security protocol that sometimes downgrade the customer experience.
Since 2015, consumers have had to adapt to chip and PIN technology at the point-of-sale, and they have long been accustomed to remembering passwords to complete transactions online. These security methods place the burden on consumers to remember things in order to make a purchase. Biometrics, on the other hand, may eliminate this burden without sacrificing security

The Evolution of Biometrics

Biometrics technology is not new. The use of physical characteristics to identify a person has been around since as early as 500 B.C., though the automation of biometrics is a more recent development Touch ID, Apple’s fingerprint recognition features, was released in 2013 as part of the iPhone 5S, the iPhone 6 and iPhone 6 Plus, among other products.
In payments, biometric authentication has bridged the gap between security and frictionless payments. The automation of authentication via physical traits (i.e. something you are), has made it seamless for consumers to verify their identity to complete a transaction.
There are two main steps for consumers when utilizing biometrics: enrollment and verification. Enrollment is the period where a user’s biometric data is collected and converted into a date template for storage. The biometric data serves as a coded digital representation of unique patterns that are only present in the person that generated them. In many cases, the user’s identity must also be verified through other means (like a government-issued ID) to ensure the right biometric data is being collected from the right person. The verification process is when a user confirms their identity by providing biometric data through a “reader”. That data is compared against the original template to check for a match. A successful match authenticates the user and allows them to continue with their purchase.
Biometric authentication continues to get more sophisticated as technology matures. Accuracy is increasing and error rates are on the decline, positioning biometrics to serve as a primary means of authentication for payments.
Consumers have bought-in, too. Juniper Research posits that 770 million biometric apps will be downloaded each year by 2019. Updated research from Juniper predicts that mobile biometrics could authenticate up to $2 trillion in sales per year within the next 5 years. The added convenience of biometric authentication along with the promise of better security has made willing participants of most consumers. The growth of mobile payments has also spurred increased adoption as the two technologies go hand-in-hand.

Where Mobile and Biometrics Meet

Consumers value both convenience and security and are loathe to sacrifice one for the other. As digital wallets like Apple Pay, Samsung Pay, and branded wallets flood the market, consumers are looking for the sweet spot between fast and secure payments.

The Juniper research cited earlier notes that mobile biometric authentication growth will be spurred by remote mcommerce transaction, which could total 48 billion in volume in the next five years. Currently, roughly 28% of mcommerce transactions are biometrically verified, so this would be an increase to about 57%.
The firm also anticipates the growth of the ‘Biometrics as a Service’ market, where AI-backed software can confirm users’ identities on various platforms. That said, it’s expected that biometric hardware will also rise in popularity and be present in more than 80% of smartphones by 2023. While fingerprint recognition is the most popular, iris recognition and facial scanning may become more prevalent as well.
Smartphones are well-positioned to accommodate biometric authentication, with estimates that almost 90% of smartphones currently in use are able to support software-based facial recognition. Up to 80% may have the ability facilitate voice-based payments.

Conclusion

As both remote and proximity mobile payments shoot upward and consumers display an increasing desire for convenience and security, biometric authentication will become the preferred way to authenticate. This seamless, frictionless way to verify a consumer’s identity pairs nicely with handheld technology and caters to consumers who want to ensure that their identity and sensitive payment information is protected. Increased use of biometric authentication is expected, as is the expansion of different types of biometric authentication available. As a technology that marries convenience and security, it will be an easy sell to consumers and should rise to a top priority for fintechs in the development of payments apps and platforms.

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