In recent decades, consumers have changed a lot on the way they make payment. Thanks to fintech proliferation, cashless transaction is gaining more momentum. According to Federal Reserve Payments Study 2016, U.S. noncash payments are estimated to have totaled over 144 billion with a value of almost $178 trillion in 2015, an increase of more than 100% in value since 2012. The main advantage of a cashless society is that it records all transactions which limit the growth of the black market. It also reduces the chances of tax avoidance. Besides, cashless societies are generally corruption free. On consumer side, it’s safer, more convenient and people have the freedom to transact whenever and wherever they want.
However, at the same time, cashless payment system comes with a higher risk of card thefts, internet fraud, and identity theft, etc. These systems face a common problem of identifying a genuine person and may give a chance of accessing your account to a fraudulent person. By just the first half of 2017, data breaches continue to rapidly multiply. As a result, identity verification practices that rely on passwords and knowledge-based authentication questions, have been considered no longer sufficient. In the technology fight between hackers and payment providers, biometrics plays a crucial role in authenticating cashless transaction to provide a more secure payment ecosystem.
Biometric technology has been applied in financial industry for years, but it has just reached widespread acceptance in 2016. With the replication of biometrics embedded mobile devices and the fast rollout of biometric-enabled banking, Goode Intelligence predicts 1 billion customers will use biometrics to access banking services by 2017. The global rollout of MasterCard’s “Selfie Pay” and Visa’s multifactor biometric authentication experience are great examples of the need to make payments faster and more convenient for consumers and still safer for financial services providers. In other parts of the world, many startups have developed biometric payment systems that let consumers pay with your fingerprint, vein or palm without keys, cards, wallets, IDs and tickets. Users are required to register on the app website, creating an account using a debit or credit card. Then they can go to the stores that installed such system for a cashless experience. All the data including biometrics, bank information are encrypted and securely stored on the cloud, rather than at shops or restaurants ensuring it from identity theft.
Talking about biometric and finance, India has been among the first to innovate and promote financial inclusion initiatives. Earlier this year, the head of a government-run policy institute, Amitabh Kant said that the country could completely eliminate the need for credit cards, debit cards and ATMs in the next three years by switching to biometric payments. All Indians will need for transactions is their thumb or eye. According to CNN, the Indian government is testing a payment app that makes use of Aadhaar biometric data, coupled with portable fingerprint scanners. It also banned all 500 and 1,000 rupee notes in November 2016 which is believed to help reduce tax evasion, money laundering, corruption and move India towards a cashless society.
Moving to a cashless economy is an inevitable trend as it brings enormous benefits not only to government, banks, but also merchants and consumers. However before cashless payment system can be truly embraced as mass adoption, it’s required that all the information remain secured from thefts and the process is quick and easy to use for users. In order to achieve that, biometric technology is indispensable to help solve security challenges and provide convenient, effortless payment transactions.