Visa's ATM biometric trial in South Africa has the potential to spread a security technology that has encountered resistance in other parts of the world, including the U.S.
With Absa Bank, a unit of Barclays Africa Group, Visa is using fingerprint scans for ATM access with EMV-chip cards. It's a technology Visa is exploring for use in several continents, but is not planned for North America, which is still transitioning to EMV cards.
Visa is one of the few companies that has the potential to successfully deploy biometric ATM authentication on a wide scale, said Thad Peterson, senior analyst with Boston-based Aite Group. Earlier attempts by startups, such as Solidus d/b/a Pay By Touch, failed to appeal to consumers even after the company won the support of prominent merchants.
"The only organizations that have any potential for doing this are the networks, as they have the scale and the access," he said. "Without the scale, you have a Pay By Touch situation, a chicken-and-egg problem and you can't get through."
In the U.S., there is much greater momentum today for the use of biometrics with mobile payments, particularly since the technology is supported by Apple Pay and Android Pay. But those deployments are the exception rather than the rule.
"Our research indicates consumers are becoming more comfortable with using fingerprints on their mobile phone, but this may not square well with using fingerprints on readers provided by others (ATM, retail POS, etc.) as the consumer is likely to assume their biometric information is being stored by that device," said Tim Sloane, vice president of payments innovation at the Mercator Advisory Group.
Consumer reaction to fingerprint authentication will be strongly influenced by their expectations and comfort levels. In South Africa, Brazil and India, for example, many government and bank disbursements are already using fingerprint authentication outside of mobile.
"It is exciting to see new developments in payments using biometrics for authentication, such as the recent announcement by Visa and Absa bank. While the trial recently announced is a step in the right direction, don’t expect to see this happening at your neighborhood grocery store anytime soon," said Michael Moeser, director of payments practice, retail and small business at Javelin. "The real challenge is making it work seamlessly in the real world on a scalable basis. It’s one thing to have it work in a laboratory with engineers. It’s another thing to have it work hassle-free a thousand times a day with the average consumer at Walmart."
Visa said that by marrying biometrics with EMV, this project will solidify the protection of both payments data as well as customer authentication.
"Because Visa’s design is built on the EMV chip standard, biometric cardholder verification can be seamlessly integrated with the technology used by 3.3 billion chip cards around the world. Financial institutions, solution providers, and others in the payments ecosystem can rely on an interoperable and consistent infrastructure for supporting biometrics," the Visa statement said. "Visa will offer to contribute the technology to EMVCo, the global technical body that manages the EMV Specifications, to further develop and administer the standard for the benefit of the entire payment industry."