The power of biometrics as a driver of the payments industry

Until recently it seemed somewhat utopian to talk about the death of traditional passwords. But the rise in digital fraud, the increasing preoccupation with data privacy and the difficulty in remembering an endless string of letters, numbers and characters for the different devices mean that the traditional mechanisms of online identity verification such as passwords or PIN numbers are no longer efficient.

In this article, the English newspaper The Guardian published a survey highlighting the suspicion with which the British public view traditional passwords –which are very rarely updated– and their opinion that voice, touch, heartbeats, hair and even saliva may be the passwords of the future.

The future is already here, and companies are opting for biometrics as authentication models. In recent years, leading smartphone manufacturers such as Apple, Samsung and HTC have all added biometric features to their devices.

Question of data

Business Insider noted that since Apple launched the iPhone 5S in 2013, the number of smartphones equipped to have biometric data has increased significantly. 62% of phones will be biometric by the end of 2016.

In the United States it is estimated that almost all smartphones will have biometrics integrated by 2021. That is equivalent to around 247 million smartphones in 2021. These are colossal figures in view of the fact that there were fewer than ten million in 2013 –and is almost double the 132 million in 2016. This change will be seen first in the iPhone (2018). It appears that Android users will need to wait until 2020.

In addition, revenues in the global mobile biometrics market are set to grow by 67% in seven years to 34.6 billion dollars in 2020, compared to 1.62 billion in 2014, according to Acuity Market Intelligence.

Fighting fraud in digital payments

This is why e-commerce sales in the United States are forecast to reach 631 billion dollars by 2020, compared to 341 billion in 2014, according to data from BI. Another prediction for 2020 is that almost half of all e-commerce sales will be made by phone.

So before digital payments can become the most widespread mode it will be necessary to tackle two of the most controversial aspects of the online commerce experience: user experience –still somewhat of a hassle for the consumer–, and the potential increase in fraud.

Entering personal information and passwords in multiple steps in devices with small screens and slow connections means that consumers tend to browse more than shop.

So additional security features such as 3DSecure, verification of addresses or security questions –although they help protect consumers' financial data– also increase the number of steps between the user and the payment, which further restricts purchasing.

Most of retailers' antifraud costs today come from digital channels: 53% in the first quarter of 2015, compared to 42% one year earlier. Whereas it is easy for retailers to check a customer's identity with a photo, it is more difficult to verify that online customers are who they claim to be.

This is where biometric authentication comes into its own, as a fingerprint or photograph can replace passwords and other measures, and allow simpler and faster digital purchases. It is very difficult to falsify unique biometric data, which implies greater protection for consumers and retailers.

Irises, fingerprints, faces and even hands are some of the parts of our body that are being used for biometric identification. Different algorithms are created and implemented in devices to prevent fraud when authenticating a person in a digital transaction.