Biometric Payments: The Future of Contactless Payments
June 28, 2023
18 years after Chip & Pin cards were first introduced in 1985, 1 billion cards were issued annually. Fast forward to the last couple of years, and we will find that number has risen to nearly 3 billion cards issued annually.
This is in contrast with contactless cards, a method that from 2007 to 2023, has achieved the same success.
With this in mind, according to CEO of biometric solutions provider Swipe, Robert Puskaric, biometric payment cards (BPC) are the “next natural evolution for the ecosystem” as issuers “seek solutions that give their customers the security and convenience that they demand”.
Efficiency, trustworthiness, safety and ease of use are the key factors driving people to adopt this payment method, which is already rising. According to Payment Cards and Mobile, 2023 looks “primed to be the year in which these solutions are deployed at scale.”
Looking three or four years ahead, it is expected that the market for payment cards will continue to grow exponentially – the prediction is that 3 billion cards will continue to be issued for the foreseeable future, with contactless expected to have a 90-95% “penetration” by 2026 at a global scale.
Seamlessness is important, but never at the expense of security; That’s where biometrics can improve the market by allowing customers to authenticate themselves in a more convenient way than previously possible. In the current market, there is a limit to how much a consumer can spend before they need to input a PIN again – biometrics will change this, as no cap will be needed when using a fingerprint sensor.
According to Payments Cards and Mobile, both the technology and the ecosystem are ready for massive deployment.
Going back to the dawn of Chip & Pin once again, one of the biggest obstacles was the necessity to install terminals everywhere, but this is not the case for biometric payment methods.
BPCs do not require any change in existing infrastructure as legacy POS terminals do not need to be replaced. As such, there is no penalty for merchants, they do not need to invest in adoption for this new type of card.
Adding to this, customers will surely be more receptive as they are already familiar with similar solutions found in daily-use technology such as most mobile devices which in the last couple of years have included some form of biometric verification, such as fingerprint sensors. This, coupled with the familiarity people have with POS terminals, biometrics in payments is expected to be easily assimilated.
Some see the rise of digital wallets as a hurdle to biometrics, however, for a card to exist in a digital wallet, a physical card has to exist too.
The majority of people still use card-based solutions for physical payments. In fact credit cards (40.5%) and debit cards (22.8%) remain the preferred payment methods for most consumers.
2023 is looking promising for the rise of this payment method, as it is estimated millions of BPCs will be issued annually within the next five years.
However, the future is not promised, and for biometrics to have a space in the payments ecosystem, it is crucial for issuers to properly educate and have an efficient onboarding plan for both vendors and customers.
Want to learn more? Check out Payments Cards and Mobile’s full write-up here.
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