The days of writing checks and carrying around wads of dollars appear to numbered as the trend towards a cashless society gains momentum. The reason? Biometric technology is leading the way as the primary driver to a more secure and trusted payments ecosystem.
How biometrics factors into a cashless society
In the technological arms race of hackers against payment providers and merchants, biometrics play a vital role in authenticating cashless transactions so they’re more secure.
It’s vital that buyers, sellers, consumers and merchants have confidence in a cashless payments system. Biometrics enhance that level of confidence making fraud and theft much harder, which improves the payments ecosystem for everyone.
Further, there’s a real need for strong customer authentication to strengthen traditional two-factor authentication or as part of a composite approach to authentication biometrics providing an enhanced level of security to financial transactions and data.
The main ways biometrics is used to authenticate someone’s identity include:
- Fingerprint scanning—this could be used together with point of sale equipment to verify identity when someone pays in person with a credit or debit card.
- Finger vein scanning—similar to fingerprint scanning, it uses the unique vascular structure in someone’s finger to prove identity.
- Voice recognition—if you want to pay over the phone you could use an automated system which would recognize and verify identity by analyzing your voice.
- Face recognition—this technique uses the unique characteristics of a person’s face to identify and verify them.
- Iris scanning—for extremely high-value transactions, the unique patterns in a person’s retina or iris could be used to confirm identity.
Combining biometric authentication as part of a multifactor authentication approach will add an extra level of security that’s very hard for cybercriminals to defeat.
Our payment habits are changing
Although cash is still one of the main ways people pay for goods and services, it is in decline around the world due to several factors including shifting demographics, access to cashless options, comfort with technology, and the way we purchase goods and services.
Consider the numbers:
- A Gallup poll shows that only 24 percent of Americans use cash for all or most purchases, compared to 36 percent five years ago.
- The Federal Reserve Bank of San Francisco reports that 32 percent of consumer transactions were made in cash in 2015, compared to 40 percent in 2012. Electronic payment methods—credit cards, debit cards, bank drafts—have increased from 53 percent to 62 percent during the same period.
- “The Atlantic” reports that check transactions fell from over 40 billion transactions in 2000 to fewer than 20 billion in 2012.
- 62 percent of Americans believe we will have a cashless society in their lifetime.
Across the globe, Sweden is poised to become the first European country to become an entirely cashless society — only 2 percent of transactions are currently made using cash.
In the UK, a Finextra report pointed out that only 20 percent of people take money from a cash machine in a month. In South Asia, India is planning to reduce electronic payment processing charges to increase growth toward cashless transactions.
As global economies move toward the very real inevitability of becoming cashless societies, biometric technologies and the security challenges they help solve will be indispensable in enabling secure financial transactions worldwide.
As marketing lead for Crossmatch, John is actively involved in championing identity management and biometrics technology solutions. His involvement and fascination with leveraging technology to address unique business challenges began earlier in his career, as Product Manager for GE’s Imagination Breakthrough innovation, VeriWise, a satellite-based asset intelligence and tracking solution for the transportation industry. He later went on to run sales and marketing for Vectronix, Inc., a subsidiary of a Switzerland-based producer of electro-optic and north-finding devices for military and law enforcement applications. John currently serves on the Board of the International Biometrics & Identity Association (IBIA).