In early May, Mastercard, in partnership with SEDESSON, the Mexico state agency for social benefits, and Edenred Bank, announced a first-of-its-kind test in Mexico’s Sonora state – the first regional test of biometric card technology in national history.
It was a launch supported by background efforts in developing biometric cards that have been three or four years in the making, as Mastercard’s Executive Vice President of Identity Solutions Bob Reany told Karen Webster in a recent conversation. It was a solution that laid in the cross-section of many separate but connected problems in the Mexican market and beyond.
On that list of topics, he noted, is the ongoing discussion of how to improve safety and security in both card-present and card-not-present transactions, how to modernize their regulatory regime around security and data sharing, and how to deal with an extremely diverse population in terms of technological and commerce sophistication.
In the U.S. market, by way of comparison, the vast majority of consumers have smartphones, and the questions are about which of the two major operating systems they are plugged into. In Mexico, there is the operating system question – but there is also the reality that a large number of consumers still use feature phones, and another large block have no mobile technology at all.
Moreover, Reany noted, Mexico’s social services have many of the same issues as government benefit agencies the world over: making sure the benefits are finding their way into the right hands, and that the recipients can meaningfully access and use those funds.
“Even in the United States, a remarkable number of dead people are collecting Social Security checks every month,” Reany pointed out, noting that no matter what the geography, making sure benefits find their way into the hands of the right people is a challenge – and one that biometrics can help alleviate.
The biometric card – although it has some inherent challenges itself – was the fix that checked all the solution boxes. But more than that, Reany said, it opened the door to a bigger world of commercial and consumer use cases that weren’t even envisioned in the early, inclusion-focused rounds of conceptualizing the product. And those unforeseen but powerful use cases, he added, will likely power these new cards and their forthcoming technological advances.
The Challenge of Building the Right Card for the Job
Given the diversity in mobile technology ownership, a card product quickly emerged as the right solution for testing with elderly groups, particularly because it was a biometric form factor that SEDESSON could support from their office.
Since this pilot audience included senior citizens, there was some concern about getting pushback from less than tech-savvy users. It turned out to be a wholly misplaced concern, Reany said, because the alternative to the biometric is a PIN code – and forgetting the PIN meant the user had to visit a local bank branch to authenticate themselves and switch out the code. Remembering a PIN can create issues in a senior population to start with, and when some proportion of that population is also illiterate, the problem gets exponentially larger.
“This product was extremely popular with seniors because they can use it with much greater ease,” Reany said. “And in some pilots, these were very old people, who were very happy with it.”
And the proof of that was in the enrollment successes, which have been consistently high in the six-plus pilots currently up and running throughout the world. Enrollment isn’t the end all, be all, Reany noted – but generally speaking, it is harder to clear that step than it is to actually match people with the right use case. But to get to that enrollment, they needed a card product that could live up to its biometric billing without creating unnecessary complications for the consumers using it.
But a biometric card that could be used by any and every customer offered some unique challenges. While a built-in battery would solve some issues, it ultimately would make the card too cumbersome and fragile to be workable, which would mean the card would have to draw power from the terminal where it is used. And they had to work with terminal technology as it is – with no new refinements or additions.
The Mastercard biometric card manages to clear that bar. It has no battery and is able to store the customer’s fingerprints as a digital template, draw power from the card reader when inserted or tapped, scan the consumer’s fingerprint, match it against the stored image and then send the issuer a “match/fail” response to complete the transaction.
It is, at base, all the functions of Touch ID built into a small rectangle of plastic instead of the pocket-sized supercomputer that is the iPhone. That’s a somewhat complicated product – and, as of today, it is also an expensive one. According to Reany, each of those cards costs $10-$20 to produce.
But, as they’ve brought the product to banks worldwide, they have seen enough unexpected interest in a remarkable variety of use cases that Reany believes the biometric card’s production costs could fall, just as they did for EMV cards. Because where there is high demand, there is the possibility of scale.
The Wider Applicability
Mastercard’s first vision of this project a few years ago was all about inclusion and efficiency – how to securely, transparently and reliably move funds to the people who might otherwise struggle to access them. The biometrically enabled card solves a lot of problems – and the base user group of government disbursement agencies is an excellent segment to capture while trying to gain scale for a new product.
But what emerged as they were presenting the product to potential issuing partners, Reany noted, are unexpected use cases in commercial and affluent customer banking.
“They can take that card and put it on their affluent and commercial card portfolio, and now there is an offering better than a platinum card or a black card,” Reany said. “This is also something that can be used to safely protect really large lines of credit.”
It is not the use case they initially built for, he noted, but as the product is gaining wider traction in pilot tests, it is a case that is showing up repeatedly. It is also one they are more directly building to support. In the last year, they have been working on expanding the product to include a contactless feature, which requires some changes to the product architecture. They have also created a remote enrollment sleeve, so customers don’t have to appear in person at a bank location to use a tablet to register their fingerprints onto their card.
“And breaking down that remote enrollment barrier will be critical for getting to those larger production runs,” Reany noted.