Biometric Cardless Payments: The imminent future

The ease of carrying out a payment transaction for customers has massively increased over the last couple of decades with the right adoption of technology, tools, and infrastructure. 

We get the thoughts of Synechron's Director of Payments, Rejin Chandran, who predicts that “even digital payments will be a thing of the past or, at the very least,  will co-exist with advanced payment options” in the near future.

We ask him why biometric cardless payments may proliferate global markets far sooner than the average consumer may imagine. 

What are the benefits of biometric payments?

There are a number of upsides to biometrics. For customers, biometric payments are the most convenient mode of payment for in-store purchases and are highly secure due to the irreplicable biometric footprint used for authentication.

Customers don’t have to worry about fraudulent transactions on misplaced/stolen cards and there is faster access to purchases after account setup since customers do not have to wait for physical card/pin mailers.  

Issuers will benefit from the reduced operational expenditure for printing and ongoing maintenance of cards, fewer fraud transactions, fewer disputed claims and greater transaction volume from customers, due to earlier access to cards and transaction convenience.

Acquirers will see a reduced number of fraud transactions and also benefit from fewer disputed claims and greater transaction volume.

How will biometric payments affect application processing?

In the future of biometrics, existing operations for application processing would continue to exist as-is. For the approved applications, each customer’s biometric signature, such as a fingerprint, iris scan, or voice sample, would be additionally collected and stored in a bank’s database.

A pseudo/virtual card number will then be generated which will be linked to the customer account number. The biometric sample collected from that customer will be linked to both the customer account number and card number.

Once this setup is completed the card number could be made transaction-ready through phone or internet banking.

How will biometric payments be facilitated? 

For a merchant to facilitate a biometric cardless payment, certain infrastructure needs to be kept in place – such as a card number entry point and a biometric scanner.

For a customer to initiate a payment for a purchase, the card number will need to be typed in at the card entry point, followed by a biometric scan.

The card network will be identified based on the card number entered, and the card number along with biometric image and transaction details, will be routed to the issuer bank for authentication and authorisation. 

How can a biometric transaction be validated?

Transaction validation would happen in two parts. The first part would be the authentication for the customer which will be done by an image comparison of the biometric captured for the transaction against the customer’s biometric footprint held in the database.

Image comparisons using AI/ML models and image recognition will be at the core of this model. Only when the image comparison is successful will the second step of the transaction authorisation be initiated.

Here, the customer eligibility for the transaction will be validated based on multiple verification checkpoints, such as cash available, expiry dates, block codes, etc., and an approval/decline decision will be based on these validations.

The approval/decline reason will be communicated back from the issuer via the card network to the merchant terminal.

But while the process may appear simple, in reality, it is not. There need to be some massive infrastructure and technological changes enforced for all three parties – Issuers, Card Networks and Acquirers – to enable biometric cardless payments.      

What impact will biometric payments have on key industry players? 

Issuers

For issuers there will need to be significant infrastructure expenditure to enable biometric virtual card processing and the associated costs for ongoing maintenance of these infrastructure changes.  

A process will need to be established to capture the biometric print from each customer prior to account creation as part of, or as an addendum to, the KYC process. High-resolution biometric scanners will need to be put in place to gather the unique biometric print from each customer. 

Next, a highly secure database will have to be established to store the biometric prints. A batch or inline interface will enable the transfer of the biometric prints gathered from customers to the database.

An online interface then needs to be set up with the database and the issuer in order to retrieve the biometric print of the customer. 

Additionally, a high-accuracy image recognition/image comparison tool needs to be deployed to compare the biometric sample received from the card network at the time of authentication with the biometric sample linked to the customer account.

An online interface to transfer the response is required to be set up for confirmation as to whether the biometric verification was successful or not.

Card networks

Similarly, card networks will need to make huge infrastructure investments to enable the capture and transfer of biometric images from customers to issuers.

There will be additional regulatory requirements around biometric image capture, transfer and verification that will have to be complied with and card networks will need to be facilitated with an option for gathering the biometric image retrieved from the acquirer’s terminal and then transferring it online to the issuer side.

After authentication from the issuer, the online response should be processed accordingly by the card network.  

Acquirers

Acquirers will need to enhance their POS terminals at merchant stores with an alternate infrastructure so they can gather the card number entered by the customer along with a provision to capture the biometric print from that customer for authentication.

Online interfaces need to be built to transfer the card number and biometric image to the card network. Again, this all requires a huge investment. 

But all these challenges are surmountable, and it is just a matter of time, I believe, that a majority of payments will be done with the blink of an eye or tap of the finger. Once the infrastructure is there, all parties will be able to realise the benefits of biometric payments.

About Rejin Chandran

Rejin Chandran heads the Intelligent Automation practice and QE Center of Excellence in the Synechron Payments business division. He has around 20 years of experience in the software industry and has worn many hats in multiple roles, within the payment domain, across software development, testing, and automation. His responsibilities include providing solutions and strategies related to delivery incubation & delivery management, business solutioning, charting roadmaps for his practice areas in line with the company’s strategy, capability building, handling partnerships & alliances, and capacity management.

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