Biometric cards represent the next generation of contactless card payments, but with the growing adoption of non-card-based digital payments, it is unlikely that they will be adopted.
One of the latest innovations in the payments sector is biometric payment cards. Zwipe has announced a partnership with Financial Software and Systems to provide biometric cards technology to cards issuers.
Zwipe is not the first company to attempt to introduce biometric cards; other companies such as Idex Biometrics, Thales, and Idemia have developed their own. They aim to make cards payments more secure and frictionless by replacing contactless payments cards with biometric cards.
However, mobile payments are already being used as a safer and convenient alternative to contactless cards. In the coming years, mobile payments will replace contactless cards, leaving no room for biometric cards.
Next generation of contactless payment cards
Biometric cards are heralded as the next generation of contactless payment cards. Current contactless payment cards present some risks, as it is possible to make transactions without any proof of identification for any transactions up to £45 ($63.60) in the UK.
With the contactless payment card limit expected to be increased to $100 ($141) by the end of the year, fraud is an even greater risk. Biometric cards are a solution to this issue.
Unlike traditional contactless payments, only the user whose fingerprint has been registered on the card can execute a transaction. This makes the need for a PIN code – and a transaction limit – obsolete.
However, mobile wallets such as Apple Pay, Google Pay, and others already incorporate biometric authentication – and thus the contactless card spending limit does not apply to them either.
Incentive to upgrade
For biometric cards to be widely adopted, consumers need to be given an incentive to upgrade from their current cards. Due to their sensor technology, consumers will be charged a fee to get biometric cards.
BNP Paribas is planning to roll out biometric cards to its Visa Premier customers for an annual fee of $29.20 by the end of 2021. While $29.20 is not expensive, it still represents a cost that consumers must be willing to pay, whereas non-biometric contactless cards and mobile wallets are already available for free.
Unless consumers are convinced that biometric security is a feature worth paying for, the adoption of biometric cards among consumers is going to remain low.
Consumers already use mobile wallets as an alternative to contactless cards, as shown in GlobalData’s 2020 Banking and Payments Survey, in which 35% of respondents claimed they regularly use a mobile wallet in the UK.
Unlike contactless cards, they have no payment limit, and they are very secure means of payments as they require facial recognition, fingerprint, or password to authorise any transaction.
Smartphones have become the most important tool in consumers’ lives and offer a convenience that will be difficult to replace, while the pandemic has contributed to the adoption of mobile wallets.
According to GlobalData’s internal database, the number of transactions made with mobile wallets increased by 26.42% in the UK in 2020, while for cards this decreased by 8.82% for the same period. The adoption of mobile wallets is expected to keep growing at the cost of cash usage and cards.
Digital wallets are also an eco-friendly alternative to plastic cards, as they don’t end up in landfill impacting the environment.
Amid the growing concern regarding carbon emissions and protecting the environment, the use of digital wallets can help reduce the amount of waste created by plastic cards. Mastercard reported that six billion cards are issued each year, and when they are replaced the majority of them end up in landfills, creating millions of tons of plastic waste.
Biometric cards offer more security and convenience than contactless cards, but the digital wallet is already a more secure, convenient method of payments that is being widely adopted. With the growing digitisation of payments methods, digital wallets will play a bigger role in the future than cards.
This was written by GlobalData payments analyst Chris Dinga.