Biometric cards are golden in the lab, but stagger in the real world
Visa, Mountain America Credit Union and Fingerprints AB were thrilled with their biometric card test, but also faced the grim realization that real world infrastructure may not be as accommodating.
Mountain America’s biometric card pilot with Visa was an early, proof of concept type of exercise involving 200 cardholders for 60 days, and found several challenges. “For example, transactions at drive-ups and many restaurants in the U.S. still involve giving the card to a cashier or waiter, rather than bringing the card terminal to the consumer,” said Matt Farrow, assistant vice president of payment and cards services at the Utah-based Mountain America Credit Union.
Another unexpected hurdle was how the cards tend to be used in bars and restaurants. The card leaves the customer’s hands, rendering it useless. But that’s the whole point of a biometric card technology.
"Our takeaways from the pilot were that while biometric cards could be a great next step in the evolution of card/payment security, there would need to be some additional changes/market maturity before they would work well for the masses," said Matt Farrow, assistant vice president of payment and cards services at Mountain America Credit Union.
While most companies wait until the technology is good enough to leave the safety of the laboratory before testing, there is still an expectation that minor adjustments will need to be made. However, sometimes the environment or human nature can cause unintended outcomes. For example, when Apple launched the iPhone 6 Plus, it found the phone could bend in a pants pocket when people sat on it. Obviously, this was not tested in the lab or early trials.
Fingerprints AB, the technology partner in the Mountain America Credit Union trial, sells biometrics for Android mobile phones and smart door locks, in addition to payment cards. The sensor reads the voltage of the fingerprint and creates a 160 by 160 pixel 3-D image. "This is used to open the card and authenticate the transaction. The EMV chip doesn’t work without the fingerprint,” said Jonas Andersson, head of standardizations at Fingerprints AB.
While the Mountain America was occurring, Fingerprints AB was also conducting a pilot with Bank of Cyprus. The purpose of these and subsequent trials were to both test the technology and enable Visa to develop the specifications for biometric cards, Andersson said. This would permit Visa to begin certifying future biometric cards against a common standard.
Payment companies want to know how well biometrics can perform because of its potential to replace PINs at the point of sale. Mastercard recently debuted a DIY fingerprint kit for improving the enrollment process for biometric cards. In both the Mountain America and Bank of Cyprus pilots, cardholders had to go to the financial institutions’ branches to enroll.
Visa did not provide details about the Mountain America test, but said there are opportunities to add new innovation to the card form factor and Visa is committed to exploring the technology.
"Cards are still the preferred form factor among many consumers, likely due to familiarity and comfort. Adding new technology to cards such as biometrics and IoT capabilities through connected payment cards can help improve the cardholder experience. We are actively working with biometric technology and issuer partners and exploring additional pilot programs for the future,” said Stephanie Ericksen, vice president, Identity and Risk Products at Visa.
Beyond overcoming the challenge in restaurants and other places where the customer is not interacting with the terminal, there are other barriers to adoption, according to Ron van Wezel, an Amsterdam-based senior analyst at Aite Group.
"First, will consumers change their behavior and learn the new 'scan and pay' experience? It will heavily depend on how smooth and easy this experience will be. Fingerprint technology has some known issues here," van Wezel said. "Second, biometric cards are much more expensive at the moment so will issuers be ready to foot the bill until mass adoption takes place?"
When produced in volume, biometric cards cost about 2.5 to 3 times that of a standard EMV card, according to Fingerprints AB. While the company has done research that found 50% of U.S. consumers would be willing to pay extra for a biometric bank card, there are other potential buyers, such as banks with affluent card portfolios and or even governments. “The appetite for biometric cards is very high. Governments could be the first users with covering social benefits and unbanked programs,” said Michel Roig, head of sales and customer support at Fingerprints AB
Despite the cost and infrastructure issues, there are factors working in favor of biometric cards. “Although it’s early days for biometric cards, I do think that there is potential for such “intelligent cards” to get traction. Biometric cards offer an alternative CVM (the fingerprint reader on the card itself) and therefore would alleviate the nuisance of having to enter the PIN,” said van Wezel.
There is the additional benefit of having the fingerprint stored on the card. The fingerprints are decentralized, and thus are not as prone to exposure from a data breach. “One could argue that adding new functionality to plastic cards is anachronistic, while mobile wallets such as Apple Pay offer the same experience. However, mobile payment adoption is still low, and evidence shows that people prefer to simply take out their card rather than pay with their smartphone. For the time being the jury is out; but if I would have to make a bet, I would put some money on this innovation,” said van Wezel.