Biometrics look like the future of authentication for payments, according to payment experts at the Biometrics Institute Asia Pacific Conference in Sydney.
“The idea that you can use your body to get access to your funds is I think very attractive,” said Arun Kendall, industry policy manager for the Australian Payments Clearing Association.
Biometrics makes sense for payments because it’s a better experience for customers while simultaneously providing higher security, agreed Tony Eyles, a product development manager at Kiwibank.
While the Spanish Confederation of Savings Banks are testing many types of biometrics, one of its managing directors, Santiago Uriel Arias, warned that not all users will be comfortable handing over personal biometrics data to a bank.
A client once told Arias that she give her voice, eye or fingerprint identity data to a policeman, but never to a bank, he said.
Older users are more likely to be resistant to biometric security than others, said Kendall. “It’s a generational issue that might not be around in a couple years’ time.”
The panellists appeared most upbeat on fingerprint authentication catching on with users, but cautioned that the future is not decided.
The inclusion of a fingerprint scanner on the most recent Apple iPhone “points the way forward” for how electronic payments could be done securely in the future, said Kendall.
PayPal has also gone down the fingerprint road with its new app for the Samsung Galaxy Gear II smart watch, noted Santiago Uriel Arias, a managing director at the Spanish Confederation of Savings Banks.
With the PayPal app, users place their finger on a scanner included in the Samsung Galaxy S5 smartphone to access their account and make payments. Arias said if fingerprints are good enough for PayPal, it might be good enough for large financial institutions.
“Why not follow things like PayPal?” he asked. “We need to compete with third parties if we want to keep our business as banks.”
Security will be critical to any effective digital payments system, Kendall said in an earlier keynote to the conference. “One of the most important things as the payment systems develops is the need to ensure the security of the system.
“The payments industry in Australia could be accused of inducing sleep” but it is in fact “critical infrastructure," he said.
With so many new entrants coming to the payments space, it is important that security standards apply to all companies, he added.
Besides security, the ideal payments system requires interoperability, simplicity, mobility, speed and accuracy, Kendall said.
The digital economy is swifter and more efficient than legacy payments system and electronics payments are quickly overtaking cash and cheques in Australia, he said, pointing to rapidly declining use of both.
In 1996, the most common form of non-cash payment was cheques. Today, cheques are the least common and debit cards are most used, he said.
The use of cash is also decreasing fast, even for payments under $20 where cash is used the most. At its peak, cash was used for 77 per cent of all transactions but that has now now dropped to 53 per cent, he said.
"In theory, no one will be using cheques by 2017,” said Kendall. However, they could stick around as long as 2025 because of older people unwilling to let go, he said.