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Biometrics, banks make gains, promising more choice in mobile payments

Choice is the big news in mobile payments this week, with several announcements pointing to a future where consumers can choose which authentication method to use as well as whether to complete a purchase via their bank’s mobile wallet, Apple Pay or an Android wallet.

Banks, merchants, software companies and other interested parties descended on Las Vegas for the Money20/20 conference this week, where a number of announcements related to innovation in financial services and connected commerce were made. One trend to emerge is the growing reliance on biometrics in mobile payments, including solutions leveraging a user’s voice, fingerprint or iris to authenticate a payment.

“Authentication without having to use user ID and PIN is the larger theme of the show,” said Thad Peterson, senior analyst at Aite Group. “How it happens is not quite clear but it looks like a combination of device ID plus some form of biometric will be the answer.

“There was some talk about allowing the customer to select the biometric that they prefer, or allowing them to use different biometrics for different circumstances, e.g. noisy or public environments,” he said.

Limited availability
Interest is growing in biometrics but current availability is limited.

At present, only Apple Pay and Samsung use fingerprint scanners for authentication, with availability limited in only a few countries. However, both are expected to launch in additional markets in 2016.

According to a new report from Juniper Research, the increased rollout of contactless payment services using fingerprint scanners will push the number of biometrically authenticated transactions to nearly 5 billion by 2019, up from less than 130 million this year.

At Money20/20, additional biometrics solutions were put forth. VoiceVault launched a voice biometric identity solution enabling users to authenticate their identity with five seconds of speech through an Android or iOS app. The company is also working with Enacomm on voice e-signatures.

It was also announced that Citi is testing an ATM that authenticates users by scanning their iris as well as via a QR code or by connecting with a smartphone.

MasterCard said it is testing the use of a variety of forms of biometrics – fingerprint, facial recognition, cardiographs and voice recognition – to authenticate identity. The trial is taking place in the United States and the Netherlands.

Powering up biometrics
Pairing biometrics with the Internet of Things opens up additional new possibilities, something that MasterCard is exploring via new partnerships with GM, Ringly and others.

“IoT literally opens up a multitude of devices to engage with consumers at a personalized level via biometrics to include facial recognition – selfies for example,” said Sam Maule, emerging payments practice lead at Carlisle & Gallagher Consulting Group.

“Integrate this with loyalty programs – think Target Redcard or Starbucks – and social and you have a winning combination to drive up consumer adoption,” he said.

“The challenge is walking the fine line between real engagement and ‘big brother.’”

Banking on mobile
Another important trend to emerge is how banks are making a bigger push into mobile payments. The big news was the launch of Chase Pay but more banks are expected to launch their own mobile wallets soon.

Once again, the focus could be on giving consumers choice, enabling them to choose which wallet to use each time they make a purchase.

“Chase Pay will get MCX off the runway and it will be very interesting to see how that combination looks from a UX perspective,” Aite Group’s Mr. Peterson said. “Also, bank wallets are getting much more visible and I expect that we’ll see several banks launching in the next year.

“Interestingly it appears that the banks will be agnostic, offering both Apple and Android wallets plus their own proprietary wallets, and letting the customer choose,” he said.

Chase Pay will be rolling out to its all the bank’s mobile customers next year. The service will use the older bar code technology rather than NFC. While the process adds an extra step, it also opens up the possibility of a larger initial audience as any retail location with 2D scanning capability will be able to accept Chase Pay while consumers will not need to have newer NFC-enabled smartphones.

Partnering well
Mr. Peterson also pointed to the immersion of payments into applications as another trend to come out of Money20/20. For example, Sage is launching a payments capability embedded in its software.

It is clear that mobile payments space is still in a stage of rapid evolution, where new solutions and key partnerships are still emerging.

“Money20/20 continues to demonstrate the need to partner well.  Look at the news for Apple/Amex,” Mr. Maule said. “Scale of the large incumbents is still a real need.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York