IMAGINE BUYING A BEER or tank of gas with just a touch of your finger or scan of your iris. The next generation of credit cards, known as biometric cards, could make this happen.
These credit cards rely on biometric authentication, which involves using some part of your physical makeup to verify your identity.
Still in the pilot phase, biometric cards may be the next big thing for banks, merchants and consumers because of the need for better card security. Although the cards won’t be widely available for some time in the United States, the technology is expected to help fight credit card fraud.
What Are Biometric Credit Cards?
You may be familiar with biometric authentication because some mobile devices use it. Certain Apple iPhones come with fingerprint and face ID features. And Samsung Pay, a mobile payment technology, uses an iris scanner.
A number of firms worldwide are testing and tweaking biometric credit card technology. They are honing technology that can ID card users by their fingerprints.
“It looks essentially the same as a standard chip card, except it has a fingerprint center in it,” says Tom Rapkoch, director of identity and risk products at Visa.
At brick-and-mortar stores, you hold the card with your finger on the designated spot and either put it in a chip reader or touch it on the reader for a contactless payment, Rapkoch says.
Once the reader contacts the card, it will try to validate the fingerprint, he says. A red light signals no match, and a green light is a go.
An electromagnetic connection between the card and the card reader activates the card’s chip and fingerprint sensor. The cards include a piece of laminate that can read and store up to four fingerprints from one person, says Bob Reany, Mastercard’s executive vice president of identity solutions.
How Are Biometric Cards Different From Other Cards?
Biometric cards may mean that you won’t need a PIN. But that’s not the only way they differ from standard credit cards.
Because of their technology, Rapkoch says, biometric cards cost issuers more to produce than today’s chip cards. One biometric card could cost more than $20 compared with $1 to $2 for an EMV chip card, ABI Research estimates. But Rapkoch says it’s too soon to tell if banks will pass this cost to consumers.
As with any new technology, the industry will work on making mass production less costly, Reany says.
Biometric cards also will use a different process for activation compared with standard cards. This process is more involved than what many people are used to: making a phone call or going online.
A biometric card from digital security firm Gemalto is activated in a process that takes a couple of steps. First, you press on the card several times with at least one finger until a light blinks to show that the print is stored, says Frederic Martinez, Gemalto’s product manager for biometrics and advanced payment.
The card is ready to use after one point-of-sale transaction – that’s an in-store purchase – in which the cardholder uses a PIN, he adds. After that, the PIN is a fallback solution when a fingerprint can’t be used.
When Will You Be Able to Get a Biometric Credit Card?
Biometric cards could appear in 2020 in some foreign markets, Reany says, especially where governments require fingerprint ID for social benefits.
In the United States, don’t expect to replace the chip card in your wallet with a biometric card too soon. Card issuers are focused on the final rollout of EMV chip cards and the influx of contactless payments, Rapkoch says.
Still, card manufacturers, issuers such as Visa and Mastercard, and banks worldwide are increasingly testing biometric cards in pilot programs. The technology today is “light-years ahead of where it was even a year ago,” with advances in usability and reliability, Martinez adds.
Trials have mainly focused on Europe, which has long used the chip and PIN system. “People really appreciate that with this card, they don’t have to put in the PIN,” Martinez says.
What Are the Benefits of Biometric Cards?
Biometric cards provide two main benefits. The first is that they process transactions a little quicker than today’s cards.
Biometric card technology reduces friction, Rapkoch says. “If you have a PIN associated with a card, this (process) goes a little bit faster because you’re basically holding the card in the same manner as you do for a transaction today,” he says.
Another benefit of biometric cards is that they are more secure than standard cards.
Chip cards in the U.S. are more secure than magnetic strip cards. But if either type of card is lost or stolen, you could fall victim to fraud. Card users lack a second form of authentication to prove that they are cardholders.
Biometric cards also eliminate problems with PINs. With a biometric card, you don’t need to use a PIN in public and can avoid PIN theft from someone looking over your shoulder, Rapkoch says.
The biometric credit card “relies on who you are rather than what you know,” he says. “That’s a bonus from a security standpoint.”
Do Biometric Credit Cards Pose Security and Privacy Risks?
Payment companies insist that fingerprint data lives only on the biometric card and remains private. “One of the things we want to stress is that there is no special database” of everyone’s fingerprints, Rapkoch says.
“The fingerprint data for a customer is contained entirely on their card and never leaves their card,” he adds. “The validation takes place in a secured area in a chip on the card and never resides in a central database.”
But security concerns could make some consumers reluctant to adopt the technology. A study by Paysafe, a global payments provider, showed that more than half of consumers in the U.S., U.K., Canada, Australia and Germany worried that biometric authentication could increase identity fraud. And less than 40% said biometrics were more secure than other methods of authentication.
Still, a Visa survey of about 1,000 Americans showed that 86% were interested in using biometrics to make payments or verify their identity. Fingerprint recognition ranked the highest of all possible in-store authentication methods.
Visa has also found in pilot tests that younger consumers tend to better accept biometric cards because they are used to this type of authentication for their cellphones, Rapkoch says.
Even older users during a Mastercard pilot in Mexico said they were happy with biometric government payment cards, Reany reports. “They were having trouble remembering their PIN, and they would have to travel to their bank branch to get a new PIN,” he says.
Will Merchants Embrace Biometric Credit Cards?
One factor that aids market acceptance of biometric cards is that most merchants won’t need new card readers. They can use the same ones that work with chip cards and contactless payments.
Biometric technology is less practical, though, when you can’t control your card, such as in a restaurant. Clearly, some kinks need to be worked out before the cards are ready for prime time.
“Retailers are very much in favor of stronger authentication, and biometrics like fingerprints could be a huge step forward over illegible signatures or even PINs,” says Stephanie Martz, senior vice president and general counsel of the National Retail Federation, a major trade group that includes department stores, grocers and online businesses.
“But the rollout of fingerprint cards could take years, and we need something now,” she adds.