Twenty years ago, outside of DNA or fingerprints being used by law enforcement agencies, for passports, or voting, biometric technology didn’t exist in the hands of consumers.
But things have progressed quite a bit over the last several years. These days, companies offer a range of biometric authentication methods for consumers, particularly in the realm of digital payments—like fingerprint scanning with Touch ID for contactless payments or facial recognition through Face ID.
There’s been a strong uptick in demand for contactless payment solutions. In fact, the global biometric payment market was valued at approximately $8.6 billion in 2023 and is projected to reach over $34 billion by 2032, growing at a CAGR of 16-17%.
With payment technology and biometrics constantly evolving, it can be difficult for merchants and retailers to meet, let alone understand, consumer demand. That’s why we’ve written this guide on everything you need to know about biometric payments, from how they work to their benefits and everything in between.
TL;DR
- There are various biometrics that can be used to verify a contactless payment, such as iris or voice recognition. However, the two most common methods are facial recognition and fingerprint scanning.
- Mastercard and Visa announced the possibility for users to pay using their biometrics, like with the Mastercard Biometric Card or Visa Ready for Biometrics program.
- Some of the key advantages of biometric payments include strong security standards and a streamlined checkout process.
What are biometric payments?
Biometric payments is a relatively new technology that offers a different way to complete the payment authentication process at a point-of-sales (POS) terminal. Basically, it replaces the card insertion (dipping) or swipe (though swiping is now obsolete in most markets) and the need for a PIN or signature, thereby authenticating the cardholder seamlessly and significantly speeding up the payment experience. Biometric solutions often also eliminate the low-value transaction limit on contactless payments.
There are various biometrics that can be used to verify a contactless payment, such as iris or voice recognition. However, the two most common methods are facial recognition and fingerprint scanning.
Facial recognition
Popularized by Apple’s Face ID, facial recognition often works by using infrared light to scan your face and pinpoint thousands of dots to authenticate your identity. You can authenticate payments simply by looking at your phone when using your digital wallet (such as Samsung Pay or Apple Pay). This technology is rapidly becoming mainstream, and industry data suggests it will be implemented in over 800 million devices by 2024.
An example of a biometric payment using facial recognition is Mastercard’s new pilot which allows users to scan their face or palm at the payment terminal when checking out.
Fingerprint scanning
While using fingerprints to identify individuals has been prevalent for decades, it didn’t become easily accessible to consumers until 2013, when Apple released the iPhone 5S. Fingerprint sensors on mobile devices can use optical scanners, or be placed directly into the display, sometimes using an ultrasound scanner.
Biometric payment cards, which are EMV cards that come equipped with an embedded sensor, can be used to verify the cardholder’s identity and complete the purchase.
How do biometrics work?
Let’s take a closer look at how a consumer might make their first biometric payment, using a biometric credit or debit card as an example.
Registering and enrolling
First, the customer needs to sign up at a financial institution that offers the use of biometrics for payments. Once they have the biometric payment card, they can begin the process of enrolling their fingerprint onto the card. The enrolled data is converted into a secure cryptographic template (a mathematical model or representation of the biometric data) and is stored exclusively on the built-in chip of the card or the consumer’s secure mobile device. The card issuer, payment processor, or merchant never receives or stores the original biometric data.
Initiating a payment
Once the customer has an activated card, they’re ready to make a purchase. Let’s say they’re at the checkout line, and there’s a POS that accepts biometric payments. The merchant may invite the customer to use the payment device to verify their identity and complete the purchase. Depending on what technology is used, this step can involve the customer tapping their card onto the payment terminal (while making sure that they keep their thumb on the card’s built-in chip).
Authenticating the purchase
The biometric data is captured and matched on the secure element of the card itself (or the consumer’s device’s secure element). Once the match is confirmed, the card’s chip sends the secure token to the payment terminal. The transaction is then authenticated through the payment processor, which creates a secure connection to transmit the card data and transaction details. The funds will be withdrawn from the cardholder’s account and deposited into the merchant’s account.
Biometric payments on the market
While this is a relatively newer form of payment technology, biometric payments are becoming increasingly popular in different markets around the globe. Some prominent examples include:
- BNP Paribas: In 2021, the French-based company launched their first biometric bank card, allowing users to upgrade to a contactless fingerprint payment option.
- Facial recognition payments in China: The adoption of facial recognition payments in China has been highly aggressive, with estimates that the number of users may have exceeded 700 million by 2022 and is a central focus for major players like Alipay and WeChat Pay.
- Mastercard and Visa: Both fintech companies recently announced the possibility for users to pay using their biometrics, like with the Mastercard Biometric Card or Visa Ready for Biometrics program. In 2022, Mastercard also announced the possibility of making payments using face or palm recognition.
- Amazon One: Amazon has deployed its own biometric payment solution, Amazon One (a palm-scanning technology), in its Whole Foods and Amazon Go stores across the US, showcasing a proprietary, non-card-based approach to biometric authentication at the point of sale.
The benefits of biometric payments
There are several perks to accepting biometric payments, both for merchants and consumers, including:
Strong security
Like other technologies that utilize biometrics (e.g., phones or laptops), biometric payments generally store your data locally. Also, since biometric EMV cards often work using NFC technology, it’s difficult for fraudulent parties to hack since the range is under four inches. And even if you were to lose your card, it would be almost impossible to use without your fingerprint, further reducing the risk of fraud.
This security is often governed by industry standards set by organizations like the FIDO Alliance, which promotes the use of strong, device-based authentication using biometrics, securing not only payments but also account access.
Streamlined checkout process
A contactless biometric payment takes significantly less time than swiping or dipping a card and entering a PIN. Biometric solutions can create a better payment experience, improving brand loyalty and helping high-volume businesses serve customers faster.
No extra hardware upgrades or processing fees
Since a biometric card payment relies on the same EMV Contactless/NFC standards as a regular tap-to-pay card, merchants who already have an NFC-enabled POS terminal do not need to purchase additional hardware to accept the card. And because contactless payments also don’t add on extra hidden charges or fees, you don’t need to worry about operating at a loss.
Industry-wide certification
It’s common to be worried about new payment technology when it enters the market. That said, remember that big industry players like Visa and Mastercard have dedicated substantial R&D resources to developing the latest biometric payment standards.
The disadvantages of biometric payments
While there are plenty of benefits to using biometric tech for payments, there can be some potential drawbacks. For example, some consumers could be more hesitant to “give” their biometrics to a large company, despite the security standards implemented.
There’s also the risk of nefarious players entering the biometric payments space, using the technology for ulterior motives.
Finally, there’s always a small chance of a false positive, which could happen if someone stole another person’s biometric card and was able to use their own fingerprint to make a payment, even without having their biometric data enrolled.
The theoretical risk is a false acceptance rate (FAR), meaning an unauthorized person is falsely identified as the cardholder. However, industry data for modern biometric sensors benchmarks the FAR at extremely low levels (e.g., less than 1 in 50,000 or even 1 in 100,000), making it a negligible risk in payment security.
The future of biometric payments
Although biometric technology has been in the hands of consumers for about a decade, using biometric authentication for payments is still relatively newer in most markets—but it’s picking up rapidly. Industry research projects that biometrics will be used to authenticate over $3 trillion of payment transactions by 2025.
To stay ahead of the curve and meet the evolving consumer demand, one thing is certain: Ecommerce merchants and retailers should accept payment methods such as contactless or biometric payments, ensuring both customer satisfaction and continued growth.
Here at Stax, we’re always on the lookout for cutting-edge payment trends. As a leading all-in-one payment processing solution provider, we’re committed to helping you grow your business with advanced payment technology, upfront pricing, and world-class customer service. From in-person or online payments to ecommerce and payment invoicing services, Stax modernizes your entire payment experience. Contact us today to learn more.
FAQs about biometric payments
Q: What are biometric payments?
Biometric payments offer a new way to complete the payment authentication process at a point-of-sales (POS) terminal by replacing the traditional methods of swiping or dipping a card and entering a PIN.
Q: What methods are used to verify a contactless payment?
Various biometrics can be used to verify a contactless payment—such as iris or voice recognition. However, the two most common methods are facial recognition and fingerprint scanning.
Q: How does facial recognition work?
Facial recognition often works by using infrared light to scan your face and pinpoint thousands of dots to authenticate your identity. This technology is becoming mainstream for authenticating digital wallet payments, such as Samsung Pay or Apple Pay.
Q: How does fingerprint scanning work?
Biometric payment cards, equipped with an embedded sensor, use fingerprint scanning to verify the cardholder’s identity and complete the purchase.
Q: How can a consumer make a biometric payment?
A consumer can make a biometric payment using a biometric credit or debit card offered by their financial institution. The fingerprint is enrolled onto the card, and the data is securely stored on the built-in chip. The biometric data is captured and matched, all on the card, to verify the identity and authorize the transaction.
Q: What are the benefits of biometric payments?
The key advantages of biometric payments include strong security standards, a streamlined checkout process, no extra hardware upgrades or processing fees, and industry-wide certification.
Q: Are there any disadvantages of biometric payments?
Potential drawbacks include hesitance from consumers to share their biometrics with large companies, nefarious players entering the market with ulterior motives, and a small chance of false positives.
Q: What is the future of biometric payments?
The global biometric payment market was valued at approximately $8.6 billion in 2023 and is projected to reach over $34 billion by 2032, growing at a CAGR of 16-17%. To meet this demand, ecommerce merchants and retailers are encouraged to accept new payment methods, such as contactless or biometric payments.
Q: Which companies have implemented biometric payments?
Prominent examples include BNP Paribas, Amazon, Mastercard, and Visa. These companies offer various forms of biometric payment authentication, such as face or palm recognition and fingerprint scanning.
Q: What are some privacy concerns surrounding biometric payments?
Some consumers may be wary of providing their biometrics to large companies despite the security standards in place. There’s also the potential risk of ill-intentioned individuals misusing this technology.
Q: How secure are biometric payments?
Biometric payments store data locally, often working using NFC technology, making it difficult for fraudulent parties to hack. The risk of fraud is further reduced, as a lost card is almost impossible to use without the cardholder’s fingerprint.
Q: How are biometric payment cards different from regular payment cards?
Biometric payment cards come equipped with an embedded sensor to verify the cardholder’s identity using biometrics. Regular payment cards, on the other hand, typically rely on a PIN entered by the cardholder.
