The Future of payment: Biometrics

Biometrics can be the answer to a more secure and faster system where monetary transactions are done via the mobile phone. Indeed, biometrics is bound to witness a rapid surge, particularly in the financial sector, with banks developing new technologies to protect individual data and improve customer experience when money is being transacted.

What exactly is biometrics and authentication?

Basically, biometric authentication is the use of biology and technology for security purposes. By the year 2020, it will replace ID cards, PINS and passwords that are actually used for gaining access to bank accounts or into any digital system. A simple example can be the authentication of a user’s identity before he/she is allowed to use a credit card to pay for a product or retrieve money. The verification here can be done through fingerprints, facial, voice or iris recognition. Mostly for online transactions via smart phones, biometrics can really revolutionize the market and make chip cards obsolete.

It is mostly a question of security

The internet, smart phone and other gadgets are expanding the frontier of a new world where everything is done with the simple touch of a button or tap on a screen. Since it is easy for users to pay with their mobile phones via the internet, it is also easier for someone to hack into your system and do whatever they want. And that is why biometric is crucial for the future development of mobile phone payment. A strong and unbreachable network is the key to reassure people to use their phones for any type of transaction.

Biometrics essentially mean more advanced methods of authentication

With the banking and airline industries falling prey to cyber-attacks during the past years, the need for stronger authentication methods for payment has become essential. Be it the retail, entertainment and hotel sector, verification barriers such as biometrics can help protect them from breaches and frauds. Although much needs to be done in terms of research and tests, the potential is there.

What are the advantages of the biometric system?

Be it the bank or customers, biometric authentication brings a wide range of benefits. It will inevitably give a competitive edge as better security increases trust, thus improving business opportunity. Additionally, it will solidify and simplify proof of identity procedures. There is also the question of fraud detection and improving identity management, which is vital for banks. As a matter of fact, when combining biometrics with other developing technologies, we can improve transparency, data analytics and real-time risk assessment. Finally, it will definitely increase efficiency by reducing cost, enhance internal control and facilitate auditing.

Customers want a more sophisticated mobile payment experience

Retailers have to take into account the changing behavior of customers when it comes to mobile transaction. Obviously, the more advanced the technology, the more businesses have to adapt to these innovations. Smart phone users are always on the lookout for smoother and more effective shopping experiences. Since traditional payment method is a complicated ecosystem, service providers have to come forward with new ideas and technologies that is simpler for users to understand. With biometrics, consumers are looking for an improvement in mobile payment solutions. For businesses, a fully secure, upgraded and sophisticated mobile shopping will be the key to people’s acceptance of mobile payments in the years to come.

The next couple of years will be crucial for biometrics

Biometrics is going to be the most important mobile payment in 2020. As per Acuity Market Intelligence, the use of biometrics to protect mobile payments will affect more than 65 percent of smart phone users. With an expected revenue of more than 34 billion dollars, mobile payments will dominate all means of monetary transactions in the future. BI Intelligence and Juniper Research are positive that in the next couple of years the number of users is forecasted to be around 99 percent in the US alone and that at least 770 million biometric authentication apps will be downloaded every year.

Your body parts are your new passwords

Indeed, your body parts will one day replace traditional payment systems and become your new password. Apart from being secure, the convenience and advantages biometrics give people is one of its key points. Biometrics allows users the leisure of not needing to remember complicated and long passwords since the fingerprint doesn’t require any memory and is a part of the body.

Biometrics is worlds apart compared to chip cards

Indeed, chip cards like EuroPay, MasterCard and Visa have the necessary protection for your peace of mind. However, with hackers trying to find more intelligent and innovative ways to break into accounts, the chip card will soon become obsolete. With biometrics, things get way more complicated for hackers as it is much more difficult when body parts are used for authentication. In the near future, banks will be more equipped to prevent fraud with biometric credit and debit cards that are fingerprint-activated.

Mobile payment apps offer a number of benefits despite privacy worries

More and more people are becoming convinced of the convenience of mobile payment apps compared to the traditional debit cards or cash transactions. However, with most of the apps serving also as social platforms, there may be a risk of privacy issues as unwanted and personal data can be published for others to view.

What exactly are mobile payments?

Mobile payment is the perfect marriage between smartphones and social networks. It is the digital version of the traditional wallet, where transactions are done online via one’s smartphone. In fact, it probably is the future of all monetary transactions as it makes faster and more effective payment possible by a simple tap on your phone’s screen. In terms of convenience, social payment makes life easier for sharing or splitting expenses with peer-to-peer payment (P2P).

The two existing types of mobile payments

payment terminals

The two existing types of mobile payments are online and physical points of sales (POS). Point of sales use Near Field Communication (NFC) technology similar to credit/debit cards. This system integrates your debit or credit cards inside your smartphone for all types of retail payments. And the other type of mobile payment is the ‘cardless ATM’. This method allows for online or on-site purchases through your ‘digital wallet’.

A convenient means of payments for customers

The biggest advantage of mobile payments is that it makes it easier for customers and business owners to conduct financial transactions. Instead of having customers pull out out their credit cards, cash, or write out a check mobile payments support contactless payments via their smartphones.

A good example of mobile payment is Venmo

Venmo is a free mobile payment app that is steadily becoming the favorite of most users. It focuses on making money transfers easier and quicker between individuals using the application. Credit and debit cards need to be linked for consumers to receive or charge friends money. Additionally, it is also possible to store payments in a Venmo account for later use or simply transfer it to your bank account.

Venmo is the combination of a social media and payment app

Compared to other payment applications, Venmo is also a social media app with followers based on your Facebook account or phone contacts. As a matter of fact, your followers or friends can access your payment data, which is automatically shared with them. The app is free from advertisement and charges users for processing costs. As of today, many businesses have started accepting payment through Venmo, making it easier for customers pay.

How comfortable are users sharing their financial transactions?

Since it is also a social network, Venmo makes your financial transactions view-able for friends and followers to see. Although it is a common trend, and beneficial for retailers, to share your shopping adventures, some people may not agree. Just like any other social media, comments and messages may be viewed by your network of followers. Fortunately, by making a few adjustments to the privacy settings of the app, you can choose who is able to view your financial transactions and data.

Is Venmo really secure?

Security has always been a sort of question mark when it comes to the internet. With the growing penetration of internet-based social networks, the risk of hacking is constantly a concern. Venmo has come up with various security barriers to protect consumers from unauthorized transactions. The app is properly secured with data encryption and PIN code for user-only access. You can also deny other devices from accessing your account in case your mobile phone is lost or stolen.

Are there other players in the social payment field?

With Venmo’s success in the social payment field, other players were bound to try their luck. Far from having a negative impact, these mushrooming social payment apps are increasing competition, making it easier for customers to pay with their mobile phone wherever they are. Some of the other apps include Apple Pay, Google Wallet, Amazon Pay, Square Cash and Facebook Messenger.

Financial institutions want a piece of the action

Financial institutions are fighting back with their own payment app. Their answer is Zelle, an easy way for clients to send money to anyone with a US bank account. With a simple email address or mobile phone number, Zelle lets you send and receive money to whoever has an eligible US bank account. As a matter of fact, Zelle also has security barriers like restricting the amount of money sent or received.

Is it the end of ATMs and checks?

Although we are far from abolishing ATMs and checks, mobile payments will play a more influential role in the way we pay for products and services in the future. The reasons why mobile payment will dominate all other forms of payments is that it is easy, simple, fast and secure.