Smartphones, biometrics and payments, best friends with benefits (for consumers)

August 2018

Smartphones, biometrics and payments, best friends with benefits (for consumers)

Mobile phones are an integral part of our daily lives. 

Their small size, the features they contain and the many use cases make the smartphones invaluable tools for people all over the world, enabling them to communicate, organize their daily routines and work, purchase goods, conduct different digital transactions, and more.

An important aspect of these devices has lately become their equipment with biometric features. Moreover, most new models have the technology to enable biometric authentication such as fingerprint scanners, voice recorders, and cameras. By 2023, over 80% of smartphones will have some form of biometric hardware, representing just over 5 billion smartphones. This has traditionally meant fingerprint sensors, but facial recognition and iris scanning will become more prominent over the next 5 years, with adoption exceeding 1 billion devices, according to a new study from Juniper Research. 

Initially, on a regular consumer base, biometrics were used to unlock their mobile phone or tablet. However, at the moement, biometrics are set to transform the way mobile transactions are authenticated by enabling the consumer protect payment information and prevent fraud, when purchasing online. 

Mobile biometrics will authenticate USD 2 trillion worth of in-store and remote mobile payment transactions annually by 2023, the Juniper research continues. This is 17 times the volume (USD 124 billion) expected in 2018. This growth is expected to be driven both by industry standardisation initiatives, like Visa’s Secure Remote Commerce, and smartphone vendors introducing different forms of biometric authentication.

Besides convenience, customers also want security. However, if they have to go through multiple processes to get a security solution, they might not adopt it. As a result, there is a balance that needs to be struck between highly secure transactions and a low-friction user experience. This balance is currently partially solved by the use of biometrics features incorporated within our mobile devices. As a result, across the world, PINs and passwords are being replaced by convenient solutions supported by biometrics.

Biometrics are expected to have a big impact on payment cards also in the coming years. Implementing fingerprint biometrics in contactless cards could be a viable and convenient solution to strengthen security, while also improving customer experience. A secure chip in the card – the Secure Element – authenticates the fingerprint and prevents manipulation. By adding fingerprint authentication to payment cards, the need for today’s purchase limits on contactless payments is reduced, as all transactions are secured.

If improved user experience and a good balance between security and risk aren’t enough good reasons for biometrics adoption, the regulatory technical standards, which come into force in September 2019 as part of the European Union’s PSD2 payments legislation, might convince users to jump on this bandwagon. Under PSD2, users must be authenticated using at least two separate elements out of the following three authentication factors: something they know (a password or PIN code); something they have (a card, a mobile phone); and something they are (biometrics, e.g. fingerprint or iris scan); which could mean using your smartphone to make purchases.

To sum up, mobile phones, equipped with biometrics, might soon become an integral part of our daily lives.