Are Biometrics the Answer to Mobile Payments?

The concept of biometric authentication sounds like something from Mission Impossible: retina scans and finger touchpads on steel doors hiding nuclear reactors. But surprisingly, this technology is becoming ubiquitous for everyday people.

In fact, you probably just used it to unlock your phone.

Biometric authentication uses a person’s physical characteristics to identify and authorize permissions, access and transactions. Most commonly, this takes the form of facial scans or fingerprints. Banks and credit card companies also often use voice recognition to verify a card user during customer service calls. Other biometric authenticators include iris recognition, retina recognition, signature recognition and even vein patterns.

Let’s take a closer look (no retinal scan needed) at how this technology is being used for secure mobile payments in banking and beyond.

The switch from passwords to biometrics

Biometric authentication is essential to the use of digital wallets (also known as mobile wallets). These payment platforms securely store a user’s credit or debit card information, often in the form of apps (like Venmo or Zelle), or directly on smartphones (like ApplePay or GooglePay). Digital wallets have also become the go-to for securely storing, using and exchanging access to holdings of cryptocurrency.

According to the results from a recent survey commissioned by Visa, consumers are starting to feel that traditional passwords are antiquated. With 1,000 Americans surveyed, the report revealed:

• More than 65% of consumers are already familiar with biometrics
• 86% of consumers are interested in using biometrics to verify identity or to make payments
• 70% of consumers believe that biometrics are easier and 46% think they are more secure than using passwords or PINs

One reason for this eager adoption? The pandemic. Digital wallet use skyrocketed as social distancing and contactless hygiene became a concern. But even before the pandemic, research was bullish on biometrics. Some reports anticipated the global biometric payment market to compound at an annual growth rate of 49%. 

The growth of the biometrics market has been driven by increasing concern for cyber theft. Hacked passwords and PINs can be devastating to people with holdings of cryptocurrency or other digital assets. Per Visa, 61% of consumers typically reuse passwords, and 40% reuse pins. Biometrics can provide a far more secure solution for banking, cryptocurrencies and mobile payments.

Convenience, concerns and Gen Z

In addition to enhanced security, biometrics make payments faster and more convenient. Forget your wallet at home? With a digital wallet on your smartphone, your credit card is “with” you, just a biometric away. 

This technology also streamlines online payments. According to that same Visa report, 59% of people have abandoned an online purchase because they didn’t have their credit card handy, and 49% have abandoned purchases due to not remembering a password. This means that payment platforms that implement biometric capabilities as part of their payment process have a better chance at increasing sales.

Biometrics do, however, come with their own set of privacy concerns. Traditionally, fingerprint scanners have been associated with law enforcement, so critics worry that sensors could be made available to government agencies or law enforcement officials. (Biometric payment service providers do not keep actual fingerprints in their databases — they keep an encrypted number derived from the finger's point-to-point measurements. It’s this number that verifies a customer’s identity, not the actual fingerprint.) A biometric payment system is only as secure as its associated database or provider, which is true for any system that stores sensitive information, passwords, or pins.

Beyond security, convenience and privacy concerns, biometric tech adoption might simply be driven by one thing: Gen Z. People born between the years of 1999-2012 currently constitute over one-third of the world’s population. Millennials rarely carry checks or cash, and it stands to reason that payments will evolve with Gen Z. The new generation is not just “tech-savvy”— they’ve grown to almost expect automated, efficient tech at every friction point of their lives.

Whether for banking, mobile payments, or buying and selling crypto, biometric authentication is the new world of passwords and PINs. With all due respect to Mission Impossible, this tech will not self-destruct in five seconds.