What Payments Professionals Should Know About Biometric B2B Payments

There are over 8 billion people alive on earth, and their growing expectations around frictionless and secure digital experiences are continually transforming payments and commerce.

Underpinning that is the emerging need for a digital identity layer. With the news that Google Wallet on Thursday (Sept. 12) unveiled a suite of new features — among them the ability to create digital IDs for use at select TSA checkpoints — financial institutions (FIs) and payment solution providers have new ways to leverage biometric authentication, addressing identity authentication pain points.

With transactions growing in complexity, volume and value, there is a heightened demand for security, efficiency and seamless experiences. In both consumer and B2B landscapes, digital payments are booming, but this growth is accompanied by rising fraud threats and the complexities of identity verification.

Biometrics, or the use of unique biological characteristics such as fingerprints, facial recognition or voice patterns for identification and authentication, is emerging as a powerful solution to address several of these pain points. This technology offers not just enhanced security but also the potential to streamline payment processes, making it particularly valuable where stakes are high and transactions more complex.

Read more: 3 Big Ideas From PYMNTS Intelligence’s Digital Wallets UK Report

Biometrics: Revolutionizing Security, Fraud Prevention and Efficiency in Payments

As the digital economy grows, so does the need for secure and reliable identity verification. In many cases, payment fraud occurs not because of vulnerabilities in the payment process itself but because of weaknesses in identity verification.

By integrating biometrics into digital identity verification, businesses can significantly reduce the risk of account takeovers and synthetic identity fraud. Biometric data provides a unique, immutable marker that ties the individual to the account, making it more difficult for fraudsters to create fake identities or gain unauthorized access.

“We’re excited about the potential of future technologies like biometrics and behavioral analytics in further streamlining authentication while enhancing security,” Brad Rosenfeld, chief marketing officer at Prove Identity, told PYMNTS, adding that “markets like Brazil and India are rapidly embracing mobile-first solutions and are fully on board with digital transformation, with everyone looking for new ways to work with financial services.”

According to “Digital Wallets Beyond Financial Transactions: A Global Perspective,” a PYMNTS Intelligence and Google Wallet collaboration, 70% of consumers across Brazil, France, Germany, the U.K. and the U.S. use digital wallets.

“Digital wallets are on a hockey-stick trajectory right now,” Chuck Fagan, president and CEO of Velera — the newly rebranded PSCU/Co-op Solutions — told PYMNTS.

As governments and regulatory bodies increase pressure on businesses to comply with stricter know your customer (KYC) and anti-money laundering (AML) standards, biometric verification is well positioned to become a cornerstone of compliance efforts in the payments space — and one of the more interesting opportunity areas could be across the B2B landscape.

See also: Digital Wallets Beyond Financial Transactions: A Global Perspective

Biometrics: Revolutionizing Security, Fraud Prevention and Efficiency in B2B Payments

While biometric authentication is already making waves in consumer payments — think smartphone-based facial recognition or fingerprint authentication for mobile wallets — the B2B sector is uniquely positioned to benefit from this technology’s potential.

One of the key pain points in B2B transactions is the cumbersome process of verifying identities. In industries like supply chain management, manufacturing and professional services, ensuring that the correct parties are authorized to approve or complete transactions often requires time-consuming manual processes. The introduction of digital identity verification using biometrics could help to reduce these delays.

For instance, integrating biometric solutions with enterprise resource planning (ERP) and treasury management systems could enable real-time identity verification of employees, suppliers and vendors. This would accelerate approval processes and reduce the likelihood of human error or fraud. Whether it’s approving a payment, signing a contract or accessing sensitive financial data, biometric verification can streamline workflows.

In the future, we may see even more advanced forms of biometric authentication, such as behavioral biometrics, which monitor user behaviors like typing patterns or mouse movements. These technologies can provide additional layers of security by continuously authenticating users as they interact with payment systems, rather than relying on one-time verifications.

Read more: 5 Emerging Security Imperatives for Digital Wallets

Biometrics also has the potential to enable seamless cross-border payments by simplifying identity verification across different jurisdictions. This could be particularly beneficial in the B2B landscape, where international transactions often involve navigating a maze of different regulations and compliance requirements.

Interoperability is another fundamental aspect of biometric adoption.

“When it comes to being able to digitize and save these IDs, and of course to use them, the first and most critical thing to establish are sound and complete standards,” Alan Stapelberg, group product manager at Google Wallet, told PYMNTS. As he explained, identity is a global use case, and digital IDs must be able to function across borders just as physical IDs do today. This requires collaboration among various stakeholders to build solutions that are universally accessible and interoperable.

Still, recent PYMNTS Intelligence data shows that while some people are using digital wallets to store IDs, not many (about 8%) are actively using them. And separately, the integration of biometric authentication into existing payment systems requires significant investment in technology infrastructure. Small- to medium-sized businesses, in particular, may find it difficult to justify the cost of upgrading their systems, despite the long-term benefits that biometrics can offer.