Mobile biometrics is set to become a must-have tool in the payments industry as end-users demand the latest technology from banks and financial service providers, while making sure that their personal information is kept secure. The technology involves the use of mobile devices to scan the fingerprint, iris or face of a customer to verify their identity whenever they make a payment through their smartphone. Using mobile biometrics will eliminate the need for passwords, and make the payment process easier for consumers.
In 2015, about 120 million customers used mobile biometrics to authenticate transactions, according to a report from Goode Intelligence. The number of customers using mobile biometrics is expected to reach over 16 billion in 2020, the report stated. Currently, mobile biometrics is increasingly being adopted across the financial industry, from automated teller machines (ATMs) to alternative types of payment methods, such as BitCoin wallets.
Whether you’re a bank, a payment service provider, or a merchant, you also need to start incorporating mobile biometrics into your payment process. Here’s why:
Enhanced security
Scanning biometrics through mobile devices adds another layer of security for transactions. Biometrics allows companies to confirm that the person making the payment is the rightful account holder by verifying his or her identity. Fingerprints, iris scans or voice recognition also eliminate the need for a person to remember his or her password, and they are difficult to get stolen. This can reduce fraudulent transactions, and minimize risk for businesses in the payments industry. Nevertheless, mobile biometrics should not only be the means to authenticate the identity of customers; it should still be accompanied with passwords to maximize security.
Lower operational costs
As mentioned above, mobile biometrics can help reduce fraudulent transactions. For banks, this results to lower costs and higher savings. When an account is breached, they need to spend to investigate the incident and even to refund the amount lost from the account holder. With reduced fraud, however, the cost of addressing account breaches will decline for banks. Additionally, mobile biometrics can help eliminate fraud in the future as voice technology can also acquire the voiceprints of fraudsters and prevent them from becoming repeat offenders.
Better user experience
Mobile biometrics can help simplify the transaction process for customers and make it more convenient for them. If they happen to forget their password, they can just have their fingerprint, eyes or face scanned to authenticate their identity. The use of mobile biometrics can also attract more millennials and younger customers to open bank accounts, as this eliminates the need for them to have to visit a branch of a bank to provide identification. In fact, 86% of millennials use their mobile device for transactions, according to a study by Mitek Systems.
Global market reach
By 2020, the total value of payments made through mobile networks worldwide is expected to reach about $4 trillion U.S. dollars, according to a report of the IDC Financial Insights. This means that more and more customers will use their mobile phones to make payments. In fact, the IDC report states that some mobile payment methods will see an annual compound growth rate (CAGR) of over 43% by 2020. For banks and payments service providers, integrating mobile biometrics now is advantageous for their business as it will allow them to leverage the growing market for mobile payments around the world.
Innovation through technology
Mobile biometrics is increasingly being adopted across banks, financial institutions and the payments industry. In the U.S. alone, six out of the largest 19 banks in the country rolled out biometrics for mobile banking at the end of 2015. Wells Fargo is testing technology for eye scanning and voice recognition, and plans to release the software this year. Meanwhile, MasterCard plans to use a technology that will confirm the identity of the user through a photo of his/her face. By using biometrics, banks and payment service providers can add innovation in their operations and improve their services to their customers.
Given these advantages, more and more financial institutions and payments service providers are expected to use mobile biometrics to make transactions more secure and more efficient for their businesses. Therefore, online merchants should also orient themselves regarding this technology to be ready to integrate it in their payment process, provide an efficient service to their end-users and become competitive in the market.
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