Using someone’s characteristics or traits as an authentication tool has long been a successful method for screening access to highly secure government or corporate locations.
But could the use of similar biometrics, considered by many to be a nearly fool-proof security method, ever find a significant–and lasting–presence in the payments industry?
SmartMetric Inc. is continuing its quest to prove it can. And some private investors, who last week provided $1 million in new funds to the Miami-based company that has manufacturing facilities in Buenos Aires, believe it can deliver on its premise for payment cards with chips holding images of fingerprint scans (see story).
Biometrics scores high praise among analysts who monitor card data security methods, but even they can’t envision a practical way for consumers and merchants alike to embrace it in a retail setting.
Many skeptics view the use of biometrics, whether through fingerprint imaging, facial or retinal scans, or voice recognition, as a “Big Brother” technique, Julie Conroy McNelley, senior analyst and fraud expert with Boston-based Aite Group, tells PaymentsSource.
“I’ve spoken with financial institutions and retailers alike, and everybody agrees that biometrics has great fraud-fighting potential,” she says. “But it is not easy to transport it to retail settings or to make it easy for the consumer to engage.”
In a retail setting, consumers have no incentive to participate in a fraud-prevention measure that may call for a fingerprint scan or voice recording, McNelley adds. Biometrics using fingerprint techniques typically compare algorithms based on fingerprint patterns to authenticate a person’s identity.
However, consumers may be more inclined to participate in biometrics at a bank because they understand their account could be at stake without good fraud protection, McNelley notes.
“A fingerprint scan could work in other geographic areas where there are no zero-liability standards protecting consumers from fraud, like we have in the U.S.” from the major card brands, McNelley suggests. “Consumers would have a reason to participate in those areas.”
In addition, merchants remain concerned about any security method that takes extra time in the checkout lane, McNelley adds.
“Merchants are already concerned about the couple of extra seconds of lane time that EMV smart cards will add to the process–and 60 seconds to get a read [on biometrics] is something that nobody would tolerate,” McNelley contends.
Six years ago, San Francisco-based Pay By Touch established a biometrics approach with a payments and loyalty program tied in as an incentive for consumers to use it, McNelley notes. “They had a good idea, but they ran out of money,” she says, referring to the company’s legal messes after shutting down and filing for bankruptcy in 2008 (see story).
Maria Arminio, president of Avenue B Consulting Inc., a Redondo Beach, Calif.-based payments management consulting firm, tells PaymentsSource she has been tracking biometrics development since the mid-1980s.
Over that time, biometrics has had a small role in the payments industry through fingerprint or voice recognition used to authenticate access to some ATMs, Arminio says.
“I can see biometrics taking hold in the health care industry for payments and patient data storage as a way to authenticate a cardholder,” Arminio suggests.
But additional technology needs for biometrics at retail point-of-sale likely would become a difficult challenge for the industry, though technology constraints alone won’t derail biometrics acceptance, she adds.
“It really boils down to an adoption constraint,” Arminio contends. “We’re still battling over EMV conversion here in the U.S., so adopting new methods doesn’t come easy.”
In October 2011, SmartMetric announced its intention to develop technology for a fingerprint scanner to be placed in a credit card, with the cardholder’s fingerprint algorithm having to match the one embedded in the card’s chip to activate use of the card (see story).
SmartMetric executives were not available for comment.
However, in a June 6 company press release, SmartMetric CEO Chaya Hendrick cited a favorable federal court ruling in April for her company in a patent infringement lawsuit against major card networks, protecting a SmartMetric patent for EMV smart card technology as it relates to how the chip communicates with payment gateways.
Hendrick views that ruling as a boost for the company’s goal of manufacturing the fingerprint scanner inside of EMV chip-and-PIN cards in the U.S., establishing what SmartMetric considers the most secure card possible.
“SmartMetric is in a position to corner the biometrics market on nearly every EMV credit or debit card issued and to be issued in the U.S.,” Hendrick stated.
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