Innovation in Biometrics Enables Alternative Payment Methods

Payments have been the major driving force for the wide-scale adoption of biometrics in the consumer market. Today, millions of customers (Goode Intelligence forecast 350 million plus during 2015) are using biometrics on a daily basis around the world to provide secure convenient user authentication and transaction authorisation and this theme is set to continue with a forecast of over three billion users by 2020. 

Biometrics for payments is increasingly a vital part of a payment service providers’ toolkit in the never-ending task of reducing financial fraud and ensuring that their customers can conveniently prove their identity and authorise transactions.

The adoption of biometrics for payments is also leading to wide-scale disruption in the payment industry, enabling alternative methods for consumers to pay for goods and services in a variety of payment scenarios. This is not simple replacing one authentication mechanism with another; the finger replacing the PIN. Biometrics is allowing alternative payment methods to be introduced, some of which are being supplied by non-traditional payment service providers. 

HYPR Corp has developed a biometric security protocol that provides digital payment platforms, including Bitcoin, with a solution to secure access to their digital payment assets.

One of the core security concerns around Bitcoin and other digital currency platforms is that unlike with credit cards, transactions are irreversible.

HYPR was founded to solve the core fraud problem by providing a definitive answer to the question of “Am I who I say I am?” 

HYPR answers the question of “Am I who I say I am?” through a three-factor authentication protocol that creates a biometric authentication bridge between the user and their mobile wallet. The cryptographic algorithm that HYPR uses is the same as the digital signature algorithm that the Bitcoin protocol uses. Because of this similarity, future iterations of the HYPR biometric security platform could be used to biometrically validate Bitcoin transactions.

Another company looking to secure Bitcoin transactions is Nymi with their heartbeat-enabled wearable band. The Nymi band can be used to store a users Bitcoin in a native biometric wallet with the private key tied to a unique ECG biometric signature. I recently demoed the capabilities of the Nymi band at a presentation I gave on the future of biometrics for wearables at the Biometrics 2015 conference in London. I even use the Nymi band to log me into my office computer and have been impressed at how natural it feels to allow me access to my computer. 

It is also enabling new ways in which consumers can use traditional payment methods, even cash (still the preferred payment type for many people). Hoyos Labs has developed a smartphone-based biometric authentication solution that aims to reduce the increasing amount of fraud at the ATM, negating the problem of bank card skimming. Their 1U ATM product is a software platform that allows bank customers to access their accounts via ATMs using biometrics on smartphones. There is no need for cards or for the customer to enter in a PIN at the ATM as the entire authentication occurs on the customer’s smartphone.

The Hoyos Labs solution is compatible with existing ATM platforms and does not need any hardware to be installed on the ATMs.

These are just three examples of how the latest biometric solutions are protecting payments and enabling alternative ways in which we can pay for a wide range of goods and services in a variety of payment scenarios; from Bitcoin to the humble bank note

I explore many more examples of biometric payments, including the rise of the mobile wallet, in an analyst report recently published by Goode Intelligence; "Biometrics for Payments; Payment Security Gets Personal". 

 

Moving from what I carry to what I wear - wearable technology brings biometric authentication closer to us

Biometrics has been creating a tremendous amount of buzz this week at two separate shows, one in Paris - CARTES 2014 - the other in Las Vegas - Money 20/20. Innovative biometric technology vendors such as EyeVerify (Eye Vein) and Agnitio (Voice) have been demonstrating how their respective technologies can bring convenient user authentication to smart mobile devices for a wide range of use cases including banking and payments.

The financial services industry is increasingly turning to biometric technology to solve a number of problems including how to conveniently authenticate mobile banking and payment customers and how to add strong authentication to previously un-authenticated contactless payments (both card and mobile) at the physical point of sale without adding friction to a currently speedy process. The latter point would enable higher value transactions to be supported when using contactless technology - currently shoppers are restricted to around $20,00 per transaction. Zwipe, a biometric card technology company, is partnering with MasterCard to extend its trial for fingerprint biometric authenticated payments for contactless payments. It also solves the problem of what if I lose a contactless payment or transit card that doesn't authenticate people when they use them.

MasterCard is also partnering with another innovative technology company in Canada, They are teaming with the Royal Bank of Canada (RBC) and Bionym, the company behind the Nymi electrocardiogram (ECG) band, to test  electrocardiogram-authenticated payments by the end of this year. The use of wearable devices for biometric authentication is set to rapidly expand over the next five-to-six years. Not only will you have sole-purpose wearables (like the Nymi), being used for biometric authentication purposes but biometric sensors and software technology will also be integrated into consumer wearable technology to sit alongside health and lifestyle applications. The creation of biometric platforms and freely available APIs will accelerate the integration of biometrics technology into a wide range of wearable technology.

The ability to leverage multiple sensors that are continuously collecting biometric data from us will revolutionize how humans are identified to a wide range of digital services and led to synergies between physical and cyber worlds. From opening up my front door and locking my car to waking up my desktop and authorising a wire transfer (BTW I am not a techno-utopian - I know that it will be extremely difficult to have the one digital identity on the single device that can be asserted across all of my connected devices and assets).

Instead of people typing in a remembered PIN, password or OTP generated by a hardware token, their identity shall be presented to connected devices through a combination of biometric data and behavioural analysis. Instead of presenting a finger to unlock an iPhone or to make a payment using a biometric card, wearable devices allow continuous biometric feedback from its owner - something that could be very powerful and potentially much more difficult to spoof or hack. It also becomes hygiene - I know that it is there and I know that it is keeping my digital and physical assets safe and secure but it is definitely not obtrusive and annoying like remembering where I put my token or unlocking my personal safe to get hold of my bulky black book of passwords (that is getting thicker and tattier by the day).

These trends are happening at an incredible pace and as a result I have decided to update a report I wrote originally published in June 2014. The report, "mobile and wearable biometric authentication market analysis and forecasts 2014-2019" has been updated with revised forecasts for wearable biometrics authentication users and reflects new market activity such as Apple Pay. The report forecasts that by 2019 there will be 604 million users of wearable biometric authentication solutions.

If you want to know more about this research or talk to me about this blog then I would love to hear from you. Contact me through the website www.goodeintelligence.com.

Thanks for reading. Alan