How Does Biometric Authentication Work for Digital Payments?

Digital payment fraud and identity theft are rampant, but advances in biometric authentication are seeking to turn the tide. But what is biometric authentication? And is it actually more secure than traditional security measures like PIN numbers? And given that ecommerce is fast-becoming the dominant sales sector in many industries, where does online commerce fit into the biometric equation?

What Is Biometric Authentication?

Biometric authentication is a digital payment technology that uses biometric analysis of physical characteristics to identify the user and authorise the deduction of funds from a bank account. Fingerprint payment, based on finger scanning, is the most common biometric authentication method, although other methods—including facial recognition—are also gaining popularity.

The following are just some of the popular biometric authentication methods that are currently available:

• Fingerprint analysis: A scanner takes a digital image of the customer’s unique fingerprint and maps it. Many fingerprint scanners rely on the Automated Fingerprint Identification System (AFIS), a comprehensive database that’s used to identify fingerprints.
• Facial recognition: A digital camera maps dozens of points on the customer’s face to create a unique imprint. Facial recognition systems are commonly used on smartphones.
• Iris recognition: A digital camera analyses the unique, random pattern in the customer’s iris to determine their identity. This method works extremely well at close range.
• Voice recognition: The customer’s voice is compared to a pre-recorded sample. This method isn’t the most accurate, but it’s extremely cost-effective.
• Palm recognition: Infrared lighting is used to analyse the unique pattern of veins in the customer’s palm. Specialised equipment is typically required for accurate palm recognition.

Biometric identification offers convenience while safeguarding a consumer’s digital identity. It replaces the process of swiping or sliding a card into a payment terminal and entering a PIN, significantly speeding up the payment experience. Most notably, this technology has the potential to combat increasing fraud incidents in the online banking sector. It analyses a precise cross-reference of identity verification, data security, payment authorization, and ongoing monitoring to facilitate more secure transactions with greater confidence.

How Does Biometric Authentication Work?

There are different ways to facilitate biometric authentication. One of the most familiar ways is through mobile payments.

When a consumer completes a digital transaction on their smartphone using a service like Apple Pay or Google Pay, they can use a biometric identifier like Face ID or a thumbprint (depending on the device’s model, operating system, and settings) to authenticate the transaction. The biometric identifier confirms that the owner of the device is making the payment and all but eliminates the likelihood that an unauthorised party is overseeing the transaction.

But while that may be an obvious example, biometric authentication isn’t limited to smartphones. In fact, the technology is increasingly being used in banking and point of sale. For instance, BNP Paribas—the second-largest bank in Europe—launched their first biometric bank card in 2021, allowing users to upgrade to a contactless fingerprint payment option. And nearly 500 million banking customers in China used facial recognition payments in 2021, authenticating payments by looking at a camera located at the checkout.

A growing number of point-of-sale systems are also incorporating biometrics as part of a two-factor authentication process. Customers may be subjected to fingerprint analysis or facial recognition in addition to entering a PIN number or submitting an alternative identifier. The goal is to make it more difficult for cybercriminals to steal people’s identities and their money in an increasingly digital world.

Is Biometric Authentication Really More Secure?

Biometric authentication is widely considered to be more secure than PIN numbers and passwords. Afterall, it’s much harder to steal a fingerprint than it is to steal a 4-digit pin or a 3-digit security code. However, it’s important to note that biometric security is not impenetrable. There are still valid security concerns.

• Biometric data—just like any security data—can be hacked and duplicated by savvy cybercriminals. It’s even possible for someone to take your drinking glass from a restaurant and use it to create a duplicate of your fingerprint. While it’s more difficult to hack biometric data than numeric passwords and PINs, the downside is that biometric data often isn’t as well-protected (due to the misguided perception that it’s inherently safe).
• Biometric data presents the risk of complacency on the part of the user. As previously noted, you can’t just assume that your safety is a given. You still have to actively safeguard your information—such as by using two-factor authentication, keeping your systems up to date, and using anti-spoofing technology when available.
• A biometric data breach can be devastating. Whereas a compromised password or PIN number can be changed, your biometric data is unique and permanent. You can’t simply change your fingerprint. As a result, a biometric breach can potentially create a lifetime’s worth of headaches.

In addition, certain types of biometric data aren’t always reliable. For instance, some people don’t fingerprint well due to excessively dry skin. This can lead to inconsistent or inconclusive fingerprinting results. When relying on biometric authentication, you want to make sure you’re dealing with a reliable analysis procedure. It also helps to opt for multimodal biometric authentication, which uses multiple biometric indicators instead of just one.

How Merchants Can Get the Most From a Biometric System

Biometric verification still isn’t widely used by merchant services providers because it’s impractical (and potentially a security risk) to collect biometric information on behalf of individual businesses—even if those businesses have a lot of loyal repeat customers. Plus, if you’re running an ecommerce business, you can’t just send a fingerprint scanner to all of your remote customers.

Biometric technologies work best for larger financial institutions (like banks) and digital wallet providers that can accommodate transactions from a wide range of businesses. That’s when the convenience really becomes evident.

For the average merchant, you can still benefit from biometric authentication even if your merchant provider doesn’t have built-in biometrics. The key is to ensure that your merchant provider supports more than just traditional credit and debit card transactions. By working with a reputable merchant provider that accommodates alternative payment methods including digital wallets, you can ensure that convenience-motivated consumers are satisfied with your checkout process. You’ll benefit from biometric authentication by accommodating payment systems that already use it.

For example, if a customer can use biometrics to access a payment method on their mobile device and then complete the transaction at your point-of-sale terminal or on your website, you’re benefiting from biometrics. Just make sure that your merchant provider offers a range of payment methods coupled with their own fraud protection methods. These are areas where Unicorn Group excels.

The Future of Biometric Systems

We can expect to see biometric verification methods used even more frequently in the future as more companies gain affordable access to them and new technologies make them more secure. In the meantime, it’s foolish to ignore their influence and popularity.

If the security process is your prime concern, the most important thing you can still do is ensure that your merchant provider is PCI-DSS compliant and committed to combating fraud in real time (while also doing your part to safeguard your customers’ financial data).

If you want to appeal to customers who prefer biometric authentication for the convenience, make sure you know which payment methods those customers are using and make sure to accommodate those payment methods. It just might have a huge influence on your bottom line.