Biometric Efforts Seek Staying Power

By Jeffrey Green (@epaymentsguy)

Until recently, little effort to bring biometrics to the masses has occurred since Solidus Networks Inc.’s Pay By Touch service shuttered half a decade ago.

Today, however, interest in the use of biometrics for authentication is again on the rise, driven by the difficulties consumers face in keeping up with the ever-increasing requirement for usernames and passwords. Many Americans are securing devices and mobile and online applications improperly. Too many are reckless in their use of user names and passwords, putting them at a heightened security risk, research shows.

The research also suggests complacency in securing device, website and mobile app access is prevalent, and many consumers either want a simpler way to keep track of multiple user names and passwords, or they will accept an alternative means to authenticate their identity. In a recent survey sponsored by PayPal and the National Cyber Security Alliance Separately, 63 percent of 1,000 U.S. adults participating said they didn’t know what financial information they stored on their smartphones, and more than 50 percent didn’t lock their mobile device with a personal identification number (PIN).

Many respondents at least recognized the need for better security, so much so that 53 percent said they would be willing to replace passwords with fingerprint identification, while 45 percent said they would allow retinal scans as an alternative.

Last fall, CSID released its own report that found 61 percent of 1,200 surveyed adult consumers reused passwords across multiple websites, while 54 percent used only five passwords or less. Still, 89 percent of respondents felt secure with their password management and use habits, though 21 percent said they had an online account compromised.

Mobile To Lead The Way

Smartphones and other computers likely will play a large role in bringing about broad biometric use for online payments and access. Apple Inc. got the movement started with biometric scans of users’ fingerprints to access the new iPhone 5S. The Touch ID function, which uses the phone’s home button and stores the user’s biometric data in the phone itself, currently is usable only to access the device, but expect iPhone apps to eventually use the function for their own access as well. Not to be outdone, Google reportedly within the next six months plans to equip Android mobile devices with biometric sensors that could allow consumers to use their fingers to access online accounts. 

Card manufacturers also are delving into biometrics. SmartMetric Inc. on October 9 announced it is in the advanced stages for the release of a fingerprint-activated EMV payment card for use in North America. The user’s fingerprint would activate the card using an built-in print reader. It plans to distribute the card through a strategic alliance with a card-issuing bank. SmartMetric is positioning the card as an “’ID and ‘transaction safe’ alternative to existing payment systems such as PayPal.” The company expects to begin testing the product later this year.

POS Biometric Use Unlikely

Interest in biometrics for point-of-sale use likely will remain limited. Whereas Pay By Touch once appeared to have growth momentum, alleged company mismanagement burned through $300 million in financing, and that ultimately led to company’s demise. Pay By Touch’s technology used algorithms to create unique identifiers for individuals’ fingers, and the company discarded original fingerprints taken when enrolling.

The network, which was founded in 2002, had grown to 3,000 locations and 3.6 million users nationally when it suddenly shut down in spring 2008. At the time, the network had the backing of such key industry players as Discover, Citigroup, and various small and large retailers, including supermarkets own by SuperValu that included Cub Foods and Jewel-Osco. Since then, few merchants have wanted to delve into payment biometrics, at least in their stores. Key investors in Solidus included the Getty Family Trust, Och-Ziff Capital Management Group, Plainfield Asset Management and Yupaica Co.

Nonbiometric Solutions

Nonbiometric solutions also are helping to overcome problems associated with remembering usernames and passwords. Indeed, password management has been a growing market for mobile apps and desktop computers.

Various password-management apps are available, including Keeper Password and Data Vault, 1Password, SplashID and Password Wallet. Each is designed to alleviate the problem remembering passwords tied to the broad range of services that require them, including online bank accounts, social networks, frequent flyer miles, merchant accounts, credit card accounts and email accounts.

Expect efforts to ease the growing burden of remembering usernames and passwords to grow. While storage apps might help resolve some of the problem remembering the information, biometrics can alleviate the need for log-in information altogether. It will just require consumers to have faith the information will be used properly, and for vendors to ensure they do.

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Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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