There are a lot of trends in payment processing technology that come and go — along with plenty of companies that fizzle out after they fail to scale their solutions fast enough to meet market demands. Topping that trend chart is the use of biometrics to authenticate an identity and process payments faster, more secure and with the tap of a finger (or blink of an eye).
In fact, according to the latest data from Juniper Research, mobile payments powered by biometrics are expected to reach $2 billion this year alone. That’s up from $600 million in 2016. By that same accord, Juniper reports that there will be an estimated 770 million biometric authentication apps downloaded annually by 2019.
As covered in our latest report on Apple and its tech innovation, it was a major push from the Cupertino-based company to incorporate its fingerprint-based biometrics Touch ID into not only payments on iPhones, but into other applications that could power its mobile payments app, Apple Pay. Although biometrics were a trend before Apple launched its product, Apple put the concept on the mainstream map.
“Apple may not be the complete stack, but they have some of the best odds at being the private initiative that pushes towards the digital revolution. Look at how mobile phones have adopted biometrics. Apple now has a service that integrates payments to merchants online and in person and payments to friends,” Payline CSO Steve Blentlinger said, speaking about the launch of Apple Pay Cash.
At the heart of what’s made Apple a leader in the world of biometrics-powered mobile payments is its many investments in new patents to keep delivering experiences through better payment processing. But Apple Pay isn’t the only technology changing the payment processing game; Samsung with Samsung Pay and Google with Android Pay have also continued to gain ground in this space — creating an crowded playing field between the three major tech giants.
As for the biggest indicator that Apple, Samsung or Google’s tech is really going to take off? Each of the companies are continually investing in patent applications in order to take their tech and products to the next level. Biometrics is increasingly becoming a normal aspect of all patents tied to payments tech.
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In fact, reports about Apple’s new patent application shows it would allow TouchID to be built into the power button of an iPhone. Taking that tech a step further, Apple also has a patent application that would build the fingerprint sensor right into the screen of the smartphone. That makes it even easier — and more intuitive — for users to authenticate their identities (and purchases) through virtually every interaction with a smartphone. This could be a game changer for the payment processing industry. Samsung has also been playing around with facial recognition tech, but so far it hasn’t made it beyond the testing mode.
Why Biometrics Will Continue To Drive Payment Processing Trends
You can always have payments without tech, but increasingly, we’re seeing the world of tech and payments merging. This has created payment processing that provides a seamless, invisible experience for the end-user in a way that blurs the line between payments, technology and commerce. More and more, we’re seeing FinTech be integrated into every step of the consumer journey, which has led to more companies investigating how they too can embrace biometrics to transform the buyer experience. The answer to achieving that goal, at least for the technology that exists in the market today, starts with biometrics.
Of course, biometrics isn’t limited to fingerprints as the only way to authenticate a payment processing experience via a mobile device. Companies like Alibaba are investing heavily in biometrics and have been exploring the concept of enabling users to pay using iris authentication, which is powered by facial recognition tech.
Regardless of if consumers have their identities verified by a fingerprint, voice recognition or by their eyes, there is one common thread uniting biometrics trends today: the ability to deliver a frictionless buying experience where the user doesn’t have to think about the payment processing nuances. There is no personal data to enter, or forms to click through — biometrics take the hassle out of the equation. As a result, payments processing technology will continue evolving at a rapid pace.
What Apple has also done to drive the payment processing innovation needle forward is give insight into what trends businesses should be embracing. This includes three trends that Payline has made standard for all its services: faster payment processing integration, leading security features and better payment experiences on both sides of the commerce experience. After all, being a leader in payments technology (as Apple has shown) is all about giving consumers a payment experience unlike anything else.
How A Rise In Biometrics Are Impacting Future Payments Trends
There are three categories of trends that everyone is payments is hyper-focused on: authentication and digital identity, fraud and cybersecurity and biometrics and better payments processing. The Juniper report indicated that a majority of smartphones will have fingerprint sensors by the end of 2017, which will impact each of those above three categories.
Many payments pundits would argue that the future of payments is all about the ability to authenticate a digital identity via a secure gateway — which starts with better payment processing. By having enhanced security, and better techniques to thwart off fraudsters and outside cybersecurity threats, companies can ensure they are providing a fully safeguarded payments processing experience for their customers.
Seeing success from these investments will encourage more companies to invest in things like biometrics technology, which will continue helping this security trend further into the marketplace. This will also create better, more seamless payments experiences focused on eliminating the friction from the payments process — while adding layers of security.
How Tech Companies Are Impacting The Mainstream Financial Ecosystem
Much of the attention about biometrics and FinTech has been about what the rapidly-growing tech companies like Apple, Samsung and Google are doing. But the investments in these technologies have not gone without notice in the traditional payments world with companies like MasterCard and Visa. For example, MasterCard has an Identity Check Mobile service aimed at replacing passwords with fingerprint authentication.
“Effective mobile biometrics melt into the broader experience of consumer-centric financial services, giving people the power to instantly access their financial information or make a payment. They’re driving the trend toward a password-free future where digital identity is all about who we are, not what we remember,” said Ajay Bhalla, MasterCard’s president of global enterprise risk and security.
When it comes to effective payment processing, whether you’re a FinTech company, a startup or any established financial firm, there’s one thing everyone has in common: all are competing to please the same customer base that expect more out of their payments experience. Investing in cybersecurity and protecting from fraud are at the forefront of what all companies care about most today, which is going to pave the way for the future of biometrics and payment processing.
Leading that charge? Tech companies, at the moment. Only time will tell how others in the payments ecosystem will invest to keep up with today’s driving trends.
Anna Lothson is a content contributor for Payline Data. She previously wrote for PYMNTS.com, as a Sr. Content Producer, where she focused on financial services and payments innovation, fraud and security, emerging payments, and FinTech news, research and thought-leadership content across the payments industry.