Biometric cards beefing up anti-fraud fight

The development of contactless payment cards based on biometrics technology is causing great excitement. Because in the next few years the technology is expected to drastically transform contactless payments worldwide. At the forefront of this development are Mastercard and Visa. And although exhaustive trials are still ongoing both companies are now confident that they are on the verge of a mass rollout of biometric bank cards.

In April 2017, Mastercard began to test the technology in South Africa. This year, the company started trials in Bulgaria. It also has plans for pilot tests to be conducted elsewhere in the world later this year. Meanwhile Visa, Mastercard’s main rival, is conducting its own biometric card tests. Together with Cyprus’ national bank and the security company Gemalto it is currently undergoing a test in the country that involves tens of thousands of biometric cards. Howard Berg, the managing director of Gemalto UK says that he expects a "significant rollout in the next couple of years".

If the rollout of biometric cards by Mastercard and Visa proves to be successful they could eventually result in the death of the humble PIN. Both companies have chips that are embedded in hundreds of millions of credit and debit cards that are in use in more than 200 countries, processing billions of payments each year.

But Bob Reany, an executive vice president at Mastercard, who is working on the firm's biometric cards promises that biometric security is going to be better than a PIN. "We've got the algorithms in great shape, now we're doing matching on the native device where the template is captured, and we're ready to go to market at some scale. I think you're going to see pockets of Europe go pretty quickly," he was reported in wired.co.uk as saying.

So what exactly are biometric cards; what is driving this new technology; and why are they creating so much excitement? Biometric cards combine fingerprint scanners - similar to those which unlock and prove identity on smart-phones - and technology that is used in chip and pin bank cards. The scanner is powered by the card reader. The cards, which can hold the data of up to four fingerprints, use the EMV (Europay, MasterCard and Visa) standard technology. This enables it to store information on the card's chip and circuits.

It is hoped that this technology will enable a drastic reduction in card fraud. When ‘chip and pin’ and then contactless cards were first introduced they were supposed to deter fraudulent card transactions. However, according to FPC Global Product Marketing Director Lina Andolf-Orup, concerns about security are rising. According to FPC data, between the first half of 2016 and the first half of 2017 contactless card fraud increased 150 percent. The biometric solution is the embedded fingerprint sensor. These allow cardholders to be authenticated as they perform transactions, even contactless ones.

Meanwhile, software companies like Switzerland’s Netcetera AG are providing some of the technological underpinnings to this biometric card revolution. In May, the company announced that it had implemented one of the first independent biometric solutions for contactless payment in Switzerland. It is distributed in the country by SwissWallet, which is a joint venture of the Aduno Group, Netcetera and Swisscard.

In a statement Netcetera said, “Viseca Card Services SA, one of the largest Swiss publishers of payment cards, was the first card issuer to integrate the payment module directly into its existing VisecaOne app. The Viseca customers of the Friborg Cantonal Bank and the Bancque Cantonale du Jura have recently been provided with mobile payment functions.”

The system is also being launched in Germany. Michael Seifert, Managing Director of Netcetera GmbH said, "The implementation of our holistic solution for mobile contactless payment to the same extent as with Viseca in Switzerland could also be groundbreaking for German card issuers and banks in order to systematically promote and implement digitization."

The solution is based on Netcetera’s ‘ToPay’ cloud payment whereby credit card data is replaced by a token and made available to the app. “This means,” says the company, “that no data comes into the hands of third-party providers that are not controllable. You are always in the sovereignty of the issuer or the bank.”

The growth in demand for biometric cards is lifting the share value of many biometric companies. At the beginning of June, companies like VASCO Data Security (OneSpan); Precise Biometrics and Fingerprint Cards all rose on the Nasdaq exchange. Scott Clements, CEO, OneSpan, confirmed that details of its initial trusted identity (TID) platform offerings will be announced “later this month.”

The company recently acquired privately-held Dealflo, a provider of identity verification, for a reported $54.5 million. And at the end of May, Precise Biometrics announced the launch of its Precise ‘BioMatch’ Card as a stand-alone product. All the signs are that cards now stand on the brink of a revolution every bit as comprehensive as the replacement of the magnetic stripe with chip and pin.

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