Mastercard recently announced a new version of their cards that features a built-in fingerprint recognition system. This is an important development for the card sector as fraud in the UK alone is running at almost £1bn – something needs to be done. But is this the right way to approach the problem?
Both banks and customers want to prevent card fraud. At present most banks take the loss when cards are used fraudulently. Even when the customer has their lost money returned, it is still a lot of trouble to manage the refund – time must be spent reviewing all purchases to let the bank know which were genuine and which were not.
Building the fingerprint recognition into the card itself, as Mastercard is testing, does fix one major problem. If retailers need biometric security systems, it may take time to roll out the fingerprint readers to every possible location. However, building this into the card itself might also be seen as a temporary solution.
Take a look at the cash machines (ATMs) used in markets such as Japan and Brazil. Customers register biometric details, such as a print of their hand, and then they can access their account and get cash without any card at all. If the bank recognises a customer based on biometrics then why would you need a card?
Services like Apple Pay have popularised the use of mobile phones for payment. Modern smartphones (iPhone 6 onwards) are equipped with a chip that can be used like a contactless card – just tap your phone on a register to make a purchase.
It seems that ultimately the best future for retailers, banks, and customers will be when payments can be easily made just by allowing a biometric test. The only difficulty will be modifying retail systems to support a card-free environment. The retailer will need to have a list of all your possible payment accounts so that scanning your hand or eye, then presents the option ‘which account would you like to use?’ The retailer also needs the scanning equipment.
The Mastercard idea might well be the best step towards this future without cards. USA only introduced a chip and pin card security two years ago, when the same system has been in use in Europe since 1990s. It can take time to harmonise standards globally. It would not be possible for UK to abolish cards if they are still required in other markets, but I think the fingerprint system shows that biometric security is the future for customers.
Will biometric security really prevent card fraud? If you have any suggestions, please leave a comment here or connect with me on LinkedIn.