Discover Financial Services will pilot Natural Security’s hands-free biometrics payment system at its Riverwoods, Ill., headquarters, the companies announced this week.
Natural Security SAS, a Lille, France-based authentication technology provider, offers a system featuring a mid-range contactless device that holds biometric data and connects to a fingerprint reader for authentication.
Testing the Natural Security system does not represent Discover’s first foray into biometrics authentication, says Troy Bernard, Discover's global head of emerging payments.
Discover was at the forefront of the Pay By Touch initiative deployed by several U.S. supermarkets in the mid 2000s, Bernard stated via e-mail.
Pay By Touch, a system developed by the San Francisco-based biometrics technology company Solidus, began in 2005 as a way to let consumers authorize grocery purchases by swiping a finger over a biometric sensor. Solidus' financial struggles led it to close its doors in 2008, leaving the industry to wonder if consumers would ever embrace biometrics as an authentication tool in retail settings.
“The greatest step forward from Pay By Touch is that biometric data is not stored in a remote database but is on the payment device, secured inside of a chip,” Bernard says.
As Discover tests the Natural Security biometrics system, the card brand will also determine the best setting for its use.
“With any new product, there needs to be a growth curve to ubiquity,” Bernard says. “We see university campus environments as a logical first step.”
A college campus can leverage many of the features of Natural Security’s product, including payment, building access and computer access, Bernard says.
Discover was attracted to Natural Security’s contactless system because so many other payment methods “involve a device to be pulled from one's wallet, pocket or purse to be used at checkout,” Bernard says.
“We believe the simple touch of a reader, as opposed to a physical device in hand, could be a new and interesting experience for consumers,” he adds.
The card placed in the Natural Security cardholder can be an EMV smart card or a traditional magnetic-stripe card, allowing it to work with current and future payment technology, Bernard says.
Less than two weeks ago, Natural Security announced pilot testing of its products with its partnering banks in France.
Biometrics may have a role in financial services, but credit card payments may not be the most appropriate, says Julie Conroy, senior analyst and fraud expert with Boston-based Aite Group.
“As we saw with the Pay by Touch example, it’s very difficult to change consumer behavior,” Conroy says. “Consumers are very comfortable swiping their cards.”
In the zero-liability market for cardholders in the U.S., consumers “don’t have a lot of skin in the game” and thus don’t have a compelling reason to change their habits for security reasons, Conroy adds.
However, consumers could change that behavior if the issuer or merchant provides a compelling incentive such as a loyalty program, or rewards, she says.
“Pay by Touch was doing this toward the end of their failed experiment, but they were out of runway by that point,” Conroy says.