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Biometric authentication: putting an end to contactless fraud

(Image credit: Image Credit: Flickr / AMISOM)

Contactless cards are continuing to revolutionise the way consumers pay for goods. Since launching back in 2007, the contactless payment method now accounts for more than 52 per cent of the UK’s monthly card transactions and overtook chip and PIN in July 2018. Yet, consumers are still fearful of the threat of fraud caused by tap-to-go payment cards. In fact, more than three-in-five (63 per cent) UK consumers are worried that their contactless payment cards could be used fraudulently, as found by new research from IDEX Biometrics ASA. 

While nearly half (48 per cent) of consumers believe contactless cards have made their in-store shopping experience more convenient, nearly three-in-five (57 per cent) are concerned that contactless transactions expose them to theft and fraud. Worryingly, more than half of consumers (54 per cent) also fear that criminals could scan a contactless card in their pocket, making them a victim of theft without their knowledge.

Authentication is the key

In a bid to reduce consumers fears and counter fraud in payment transactions, the European Banking Authority introduced the Second Payment Services Directive (PSD2) on 14th September. This new law, aimed at enhancing online and payment security, requires banks and retailers to implement new Strong Customer Authentication (SCA) methods for online and in-customer card payments. For consumers, this means providing at least two factors of authentication for transactions. These are factors such as a PIN or a one-time passcode, or biometric data, combined with the possession of a payment card—even for contactless payments.

The introduction of contactless payments was supposed to make shopping easy. But while the roll out of new SCA factors aims to combat fraud concerns, these additional authentication methods are actually frustrating for shoppers.

Our research found that two-in-five (44 per cent) 25-34-year-olds believe that the current £30 limit for contactless payments should be removed altogether and nearly one-third (27 per cent) of adults overall agree. PINs prove just as much of an inconvenience, as more than a third (35 per cent) of 18-34-year-olds will make sure their transaction is under £30 so they can simply tap and pay.

Enhanced payment security

However, with more than a quarter (26 per cent) of those with a bank account concerned about the security of PINs to keep their money safe, not even passcodes are strong enough for consumers. Evidently, we need a better solution to prevent contactless card fraud, alleviate consumer fears and encourage worldwide adoption. Our data shows that UK consumers are ready to welcome a new form of payment card, one that combines both convenience and enhanced security.

Notably, nearly half (49 per cent) of consumers state they would actually feel more secure if they were able to use their fingerprint and PIN to authenticate transactions via their payment card. This highlights that consumers would be much more confident about contactless payments if their bank card was protected by biometric authentication, such as a fingerprint scan, and not just card possession or a PIN as a verification method.

Consumers want more convenience than PINs provide. More than a third (35 per cent) of UK consumers already expect fingerprint biometric authentication to be rolled out for transactions by 2020, so banks and card manufacturers need to step up now to adopt biometric technology and revolutionise payment cards for the future of payments.

Contactless fraud, PINS and payment limits: a thing of the past?

With the addition of fingerprint biometric authentication, payment cards can’t be scanned from your pocket or used without your knowledge. This is because the registered fingerprint must be on the card sensor to verify a transaction. This ensures a stronger level of security for contactless payments and reassurance for consumers.

Security of their data is also an important concern for UK consumers. More than two-in-five (44 per cent) consumers state that if banks can assure them that their fingerprint biometric data would be safe, unshared and not held anywhere, they would be happy to use biometric authentication as a replacement to their PIN. Crucially, on fingerprint biometric cards, at enrolment, the fingerprint image is instantly processed into a data template. This is then stored securely in the card and not in a central database, meaning the customer’s details never leave the card.

Despite consumer fraud concerns, contactless transactions in the UK continue to grow every day. Therefore, the financial industry must do more than just introduce multiple new authentication factors to address consumers’ growing concerns about card theft and contactless fraud.

In our have-it-now era, consumers desire convenience, speed and security - fingerprint biometric payment cards, for example, would bring these features to the payment market. Fingerprint biometrics offer a much easier and quicker solution in comparison to payments that rely on PINs. It’s important to recognise that with the support of biometric technology, fingerprint authentication payment cards can help overcome contactless fraud and essentially enhance our shopping experience.

David Orme, Senior Vice President, IDEX Biometrics ASA

David Orme
David Orme is Senior Vice President of IDEX Biometrics.