What are merchant initiated transactions & why are they considered low risk?
A guide to using biometrics in payments
Confirming payments using biometric technology offers convenience for businesses around the world, from fingerprint analysis to signature recognition. But what are they, exactly? And how do they work?
In this article, we’ll explore the world of biometric payments, discussing their advantages and disadvantages for businesses and consumers, the different types of biometric authentication, and the future of biometric payments.
We’ll also highlight some notable examples of biometric payments already in use in various markets around the world.
What are biometric payments?
Biometric payments assess people’s unique physical characteristics – such as their eyes, face, or voice - to authenticate their identity and complete a financial transaction. Below are the most common types of biometric payment:
Iris or retina recognition
Iris or retinal scanners capture the unique patterns in your eyes, and compare them to a pre-registered template to authenticate your identity.
Popularized by smartphone face ID, this method uses infrared light to scan the customer’s face and pinpoint thousands of dots to verify that person’s identity, often used for digital wallet payments via Samsung Pay or Apple Pay.
Another example is Mastercard’s new scheme that enables users to scan their face or palm when checking out via the terminal. Meanwhile, according to Juniper Research, facial recognition will be implemented in over 800 million devices by 2024.
Voice recognition is a type of machine learning – known as ‘deep learning’ – that evaluates your unique voice patterns, including your accent and how fast you talk. It can also identify whether you sound sick or have a sore throat, helping your business authenticate a specific person’s voice. While speech recognition evaluates spoken words, voice recognition authenticates the actual speaker.
Vein recognition uses near-infrared light to scan the vein patterns on your palm or finger, analyzing the blood vessels visible from the surface of the skin or fingertips. Normally, you place your hand on the biometric payment device which records the pattern of your palm veins.
Signature recognition is a type of behavioral biometric that scans your signature and digitizes it through an optical scanner or camera. The signature is then analyzed through an algorithm that scans the signature’s shape in order to authenticate the purchase.
How do biometric payments work?
Sometimes used in Strong Customer Authentication (SCA), biometric payment systems typically involve three main steps: registration, payment initiation, and authentication. Here’s a brief overview:
The first step in a biometric payment process is to register the biometric information of the user. This may involve capturing the iris, face, voice, vein patterns, or signature, and creating a template for future use. That data is then securely stored on the chip or the device built-in chip, not on the fintech brand’s servers.
The user may need to visit a registration center or complete the process remotely through an app or website. Whatever the scenario, the system stores a representation of the biometric data, not the actual fingerprint or face itself.
2. Payment initiation
Once the user's biometric information is registered, they can now buy things using their biometric data. As the merchant, you may now offer to use popular payment methods like FaceID.
The final step in the biometric payment process is authentication, where the user's biometric data is verified to ensure they’re the authorized user. The authentication process involves comparing the user's biometric template with the data captured during the payment initiation step. If the biometric data matches, the transaction is approved, and the payment is processed.
Advantages of biometric payments
For businesses, there are several advantages to using biometric payment systems, including:
Biometric data is unique to each individual and can’t be easily duplicated, making it difficult for fraudsters to steal and misuse the data, reducing the risk of fraudulent transactions, chargebacks, and other financial losses.
Enhanced Efficiency in Online Payments
Biometric payment systems can optimize the online payment process, accelerating transaction times and enhancing the customer experience. This is especially advantageous for businesses with high volumes of transactions, such as e-commerce platforms, online food delivery services, and digital financial institutions. With biometric payments, customers no longer need to input card information or remember passwords, making the payment process faster and more efficient.
Elevated Customer Experience in E-commerce
By streamlining the online checkout process, biometric payment systems offer a convenient and secure payment method for customers. This technology often eliminates the need for entering card information or memorizing passwords, allowing your customers to complete transactions swiftly and effortlessly, reducing friction in the payment process. This can lead to increased customer satisfaction, loyalty, and repeat business for your online enterprise.
Disadvantages of biometric payments
While there are many benefits to using biometric payment systems, there are some potential drawbacks to consider, including:
Biometric data is highly sensitive, and its use may raise privacy concerns among your customers. For example, there’s a potential risk that personal biometric data may be misused or stolen, which could lead to identity theft or other fraudulent activities.
These systems may not work for all your customers, nevertheless with voice commerce it is easier to target as they tend to be more tech-savy and are often quicker to adapt to new technologies.
Why biometric payments are the future
Biometric technology has been available to consumers for around ten years, but using it for payments is still a relatively new concept in most markets. However, it’s quickly gaining popularity, with research from Juniper predicting that biometrics will authenticate $2 trillion in payments by 2023, a significant increase from the 2018 estimate of $124 billion.
To remain competitive and meet the changing demands of consumers, we recommend that businesses, particularly those in ecommerce, start accepting alternative payment methods. This should result in happier customers and a better bottom line.
Some notable examples of businesses embracing online biometric payments include the launch of Mastercard's biometric authentication solution, which allows users to verify their identity using a selfie or fingerprint when making online purchases. Another example is the widespread adoption of Apple Pay and Google Pay, which use biometric authentication like fingerprint or facial recognition to enable secure and seamless online transactions. In addition, Amazon introduced Amazon One, a palm-reading technology that allows customers to securely link their palm print to their account for faster and more convenient online payments.
Is Checkout.com offering biometric payment options?
Checkout.com offers a variety of alternative payment methods, like Samsung Pay or Apple Pay that have biometric authentication options.
But more than that, Checkout.com has a team of experts that ensure that our merchants have access to the latest technology in payments - allowing merchants to offer a wide range of payment methods to their customers around the world.
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