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The diverse biometrics making digital payments work

As we’ve discussed previously, biometric authentication is a key element in achieving frictionless banking. Customer authentication becomes seamless and hassle-free thanks to reducing the steps needed to access accounts, manage finances and to complete transactions.

The rise of digital banks and other fintech players has been largely driven by the customer experience they provide. Biometric functionality, such as fingerprinting scanning, facial recognition and voice recognition, is now built into mobile devices and computers, leading to new ways of authenticating users.

As well as being more convenient, biometrics are more secure than established authentication methods such as PINs passwords, as they are less susceptible to fraud and error.

The European Payment Services Directive 2 (PSD2), due to come into force in September 2019, require two-factor authentication for logging into bank accounts. However, biometric-based methods will still play a role, albeit supplemented by additional information or one-off codes.

In fact, it has been predicted that there will be 2.6 billion biometric payment users by 2023.

As their use grows, biometric techniques for authenticating payments are also evolving, to include ever more innovative approaches.

In China, for example, tech giant Alibaba has developed what it calls ‘smile-to-pay’ facial recognition technology for use at KFC outlets across the country.

First introduced by Alibaba’s Ant Financial in Hangzhou, the technology is aimed at younger consumers. As the name suggests, customers smile at a self-service screen and a 3D camera scans the customer’s face to confirm their identity. To use the service, users must be registered customers of the Alipay app.

Also in China, Beijing Subway is reportedly considering the use of facial recognition alongside palm scanning to increase passenger flow through busy stations on its underground network.

The palm scanners would replace the need for tickets with users’ bank accounts associated with their palm prints. Palm scanning is already in use in Shanghai for passengers exempt from ticket fees, like revolutionary veterans and disabled policemen.

The system’s facial scanners would record passengers who attempt to board trains without paying and flag them across the network.

Understandably, there are concerns about that the extensive use of such biometric data as a way for the authorities to consolidate and expand China’s state surveillance powers.

Biometric-enabled payments are in development in other countries as well, though. In France, for example, the Société Générale bank has trialled a biometric payment card. The idea is to use fingerprint data as a way to provider an additional level of authentication for contactless payments that are over the maximum value of €30.

Payments giant Visa is developing biometrics payment technology for the Tokyo 2020 Olympic Games. The plans for Tokyo are being developed in collaboration with the government-backed Cashless Japan initiative, which aims to double digital payments to 40 per cent of all transactions in the country by 2025.

Visa previously experimenting with wearable payment rings at the 2016 Olympics in Rio de Janeiro, and with gloves and lapel pins at the 2018 Winter Olympics in PyeongChang. Tokyo 2020 should see some interesting biometric payment innovation.

Biometrics are now an established authentication method for digital payments. With customer experience and convenience now so important in financial services, these innovations could be just the start.

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The diverse biometrics making digital payments work
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