How biometrics is changing identity and financial services in Australia
Many Australians are already making biometric payments several times a week without realising it. When we press our thumbs to our smartphones to confirm the purchase of a new app or a music download, this is exactly what we are doing – using one of our unique physical characteristics to make a payment.
As the name suggests, biometric payments involve the use of biometric authentication, such as fingerprint scanning, voice or facial recognition, to verify the identity of the shopper before the transaction goes through.
While many people are familiar with using fingerprints to make purchases on their phones, biometrics is also increasingly being used for in-person purchases.
Mike Ebstein, a specialist payments consultant with MWE Consulting, says biometrics can remove friction from the payments process because shoppers won’t have to remember their pin numbers or present their physical card. Instead, they might use a thumbprint on their phone.
“If you can prove that you really are who you say you are and if you can do that with your fingerprint or another physiological means, then it’s going to speed up the whole process,” Ebstein says. “It’s an almost foolproof means of identity verification.”
Ebstein expects mass transit such as bus and train journeys to further drive the use of biometric payments with passengers clicking on and off with their thumbprint rather than with transport cards as they do now.
As it stands, Australians already feel comfortable using their fingerprints for identity authentication. Deloitte estimates we make 100 million imprints a day using smartphone fingerprint scanners.
Fingerprints have been found to be a more convenient and secure means of identity verification than passwords but facial biometrics could take that security up another notch.
Biometrics as a defence against fraud
According to Australia Post’s white paper, A frictionless future for identity management (PDF 5.9MB), an estimated 40 per cent of all fraud and deception offences in Australia in 2013/14 involved identity-related crime. eCommerce merchants currently lose between 1 and 5 per cent of revenue to fraud and across all sectors, compromised security contributes to $2.4 billion in fraud every year.
Facial biometrics has been earmarked as one of the technological bulwarks against fraud and Australia Post released it as part of its Digital iD™ solution in December 2017.
Cameron Gough, Australia Post’s General Manager of Digital iD™, however, says that facial biometrics is just one element of a broader approach to security.
During a panel discussion on digital identity and KYC (know your customer) at the Intersekt FinTech Festival in Melbourne last November, Gough said, “Biometrics could enhance security if it’s used well but there’s a danger when organisations only use one method for identity verification. The better approach is to make biometrics part of a more comprehensive identity verification solution.”
ATO using voiceprints
Earlier this year, ANZ announced it would become the first Australian bank to introduce voice biometrics to improve security on mobile devices to allow higher value transactions.
Customers using ANZ’s mobile app can now use their voice to automatically authorise payments of $1000 or more instead of having to visit a branch or access internet banking as they previously had to.
Various arms of the Australian government are also already using biometrics like the Australian Taxation Office (ATO), which gives taxpayers the option of recording and saving their voiceprint when they ring the ATO. The ATO says this will save time and the need to answer security questions every time someone rings.
Users of the ATO app will be able to login with their voice instead of having to remember usernames and passwords. Already, about 2.9 million people use the service and the ATO expects this number to reach 4 million by the end of 2018.
The Department of Immigration and Citizenship meanwhile requires visa applicants to submit a facial image with a digital camera and a 10-digit fingerprint scan with a digital finger scanner when they apply for a visa under some categories and in certain locations. It says this will help protect visa applicants from identity fraud and strengthen Australia’s border security.
Australia Post is also tapping into the potential of biometrics for its Digital iD™ solution, which provides identity verification services for a range of government and private sector organisations.
Selfies to confirm payments
A survey commissioned by Visa in 2016 revealed that 56 per cent of Australians would be comfortable using their thumbprint, voice or retina for payment. It’s a strong indication that many Australians are ready to make more use of biometric payments.
According to the research, the appeal of biometrics is that it is more secure (45 per cent) and the need to not have to remember a pin/password (40 per cent) is driving consumer adoption and readiness.
Visa has worked with Fitbit to allow consumers to make contactless payments using the fitness tracking company’s Iconic watch. Users link a credit card to the watch and then enter a four-digit PIN number to enable payments for 24-hours.
However, payments are only enabled when the watch is strapped onto the user’s wrist. Once the watch is unable to detect the user’s pulse, it automatically disables the payment function.
Biometrics is also being used for online payments. In some countries, Mastercard has introduced an app to allow cardholders to authenticate online payment by scanning their fingerprint or by taking a ‘selfie’ with their mobile phone.
The credit card company says Mastercard Identity Check Mobile eliminates the need for cardholders to remember passwords, dramatically speeding up the digital checkout experience while also improving security. The company says there is no launch date yet for Australia.
Mastercard is also trialling a credit card with a fingerprint sensor that will verify the identity of the shopper for in-store purchases.
Ebstein expects that biometric payments will ultimately be facilitated by smartphones, without requiring the card to be present. “It’s all part of this drive, this move to greater speed, greater convenience, greater security for the shopper and the merchant.”