Biometrics: The Future Of In-Person PaymentsMiCamp Solutions
As more consumers make the transition from physical payments like cash to electronic payments like Apple Pay, tech companies are working diligently to improve the user experience. Although mobile payment adoption is slow, 29 percent of millennials reported using a digital wallet in the past 30 days and “payments from mobile pay devices are making their way toward the mainstream,” says Mark Ernst, chief operating officer at Fiserv. However, one reason mobile payments have gathered as much traction as traditional payment methods could be due to their ease of use (or lack thereof). Many consumers are comfortable with the familiarity of physical payments and using new mobile pay options may seem like an unnecessary hassle.
Tech companies aim to change all of that. One barrier to usability, authentication, is a concern large companies like Apple are hoping to effectively address. Recognizing that most consumers don’t want to enter a passcode every time they pay, tech companies are eyeing biometrics as a possible solution to making mobile payments both frictionless and secure.
Despite the work that is being done on the user experience side of mobile payments, consumers still need to become comfortable with going electronic. Here are a few issues mobile developers need to address as they push digital payments into the mainstream.
Passwords Are Passé
During the checkout process, neither consumers nor merchants want to wait for customers to enter user credentials into an app, such as a username and password. This is especially true at peak times, such as the lunchtime rush or seasonal shopping events like back-to-school sales. Most mobile devices already have built-in fingerprint sensors, but as mSIGNIA’s CEO pointed out, payment-related biometrics will likely go well beyond the fingerprint. When a consumer can be authenticated using a combination of biometrics and data gathered on a device, payment security is greatly increased.
Companies like Starbucks and Walmart have launched mobile pay apps, but these solutions appeal primarily to the most loyal consumers. If consumers must download an app for every place they eat, drink, and shop, they’ll quickly revert to using traditional payments. Merchants with proprietary payment apps that see the most use and success are those that offer consumers rewards for purchases made via the app.
For smaller merchants, it may make more financial sense to focus on embracing large-scale payment platforms like Apple Pay and Android Pay, as these platforms are more likely to attract and be used by the average consumer. Setting up for these platforms means working with your payment processing provider to ensure your point of sale terminal is equipped to accept contactless payments.
Although biometrics have been praised as a safer alternative to plastic, some experts don’t agree. In fact, storing a person’s physical data could be even more dangerous, experts assert, since that data could easily lead to identity fraud if stolen. Companies like Apple are addressing those concerns by keeping the biometric data between itself and the customer, sending confirmation signals to the merchant rather than a copy of a consumer’s actual fingerprint. However, hacking risks exist at every point where biometric data is stored, so it’s important that devices and servers remain secure at all times to prevent a catastrophic breach.
Biometrics are already closely tied to digital payments, but as more consumers pay using their mobile devices, it’s important to understand the risks. Payment processing providers, merchants, and device manufacturers should all take measures to ensure consumer data remains as secure as possible. Unlike credit card numbers and expiration dates, fingerprints and iris scans cannot be changed once stolen.