Biometric Payments: Fostering Financial Interactions & Enhancing User Convenience

Has the world transitioned into a fully digital ecosystem of payments? Are we truly, accurately, securely, and swiftly witnessing biometrics being used not only as an identity-proofing technology but as a secure payment gateway solution too? Isn’t it enough for the world to embrace facial recognition as the only required biometric payment method?

The global biometric market is experiencing significant size growth, which reportedly generated $8.84 billion in 2022 and is set to grow by $31.24 billion in 2030. Businesses must start switching to facial recognition that will not only secure users’ financial interactions but also empower them to control their financials. Rest assured the element of data privacy and other concerns pertinent to the use of biometric payments, we shall talk about it in this blog in detail guiding our readers on how biometric payments work and why facial recognition is considered the prime biometric technology in the financial sector.

Biometric Payments: Secure & Convenient Transactions 

Biometric payments, a point-of-sale (POS) technology, is an advanced way to conduct financial transactions, using unique biological characteristics of the users to authenticate their identity before processing a potential transaction. Distinct biometric identifiers such as fingerprints, facial profiles, voice patterns, or iris scans are employed to confirm the authenticity of the claimed identity. 

Facial biometrics is the most secure and reliable approach out of all biometric modalities, as it’s daunting to spoof unique facial attributes. Face biometrics makes it seamless for users to conduct transactions or payments using their faces, eliminating the need to remember complex passwords and present physical ID documents. In 2019, E SUN Commercial Bank in Taiwan made history by launching the world’s first automated ATM equipped with facial recognition technology, enhancing user convenience by offering contactless transactions.

Key Technologies Employed in Biometric Payment Solutions

1. Facial Recognition

Face biometric systems are becoming widespread authentication tools transforming digital banking and improving user experience. Facial recognition uses advanced cameras and artificial intelligence algorithms that minutely analyze facial features and authenticate users by cross-referencing face biometrics against available datasets of stored IDs, enabling faster payments.  

2. Fingerprint Recognition

Authentication via unique fingerprint patterns is the most commonly used ID verification method and is prevalently used in unlocking smartphones, biometric card payments, and POS systems. Fingerprint recognition systems scan and analyze unique ridges and valleys present on fingertips and match it against the stored information for accurate verification of users. 

3. Other Biometrics

Voice recognition, iris, or retina recognition are also employed in individual’ verification. Retina recognition is considered the most accurate and reliable biometric identifier, as it’s challenging to replicate or spoof intricate retina patterns. Technical challenges and user unfamiliarity are the few hindrances in the widespread adoption of these biometric modalities. 

Rapid Surge in the Market Growth

Biometric payment solutions emerge as a secure and reliable alternative approach to traditional methods of ID verification including passwords, PINs, or physical documents, which are prone to replication or spoofing.

A study reveals that the global market for biometric payments was valued at $8.4 billion in 2023, and is projected to surge to $37.4 billion by 2033, with an annual growth rate of 16.3% from 2024 to 2033. The major drivers behind adopting biometric payment solutions are the increasing demand for secure transactions and the escalating threats of cyberattacks. 

Understanding the Process of Facial Recognition Payment

Biometric authentication technology has garnered great attention since the mid-2000s, and many settings including grocery stores, retail stores, convenience stores, and gas stations are implementing this technology to ensure secure and expedited transactions. Interestingly, banks and money service businesses use face-recognition payment systems to secure financial transactions and enhance user convenience. 

The payment process occurring through facial recognition involves three basic steps briefly expanded below 

• Enrollment: This step involves registering the user’s facial biometric data into a database and a facial profile is generated which is linked with the claimed identity to confirm the authenticity of the user. 
• Authentication: Before making a potential financial transaction, a facial recognition camera scans the user’s face and facial recognition software compares the face with the registered identities and government databases to confirm the authenticity of the user. 
• Authorization: When the claimed identity matches with registered data, the system authenticates that the user is genuine and the transaction is approved, resulting in a seamless & secure financial transaction.

Thanks to the use of biometric technology, Siam Commercial Bank declares that it only takes 9 minutes to open bank accounts or trading accounts. Customers are just asked to present ID cards, scan their faces, and sign electronically to complete the e-KYC process.

Face Payments Transforming Money Service Businesses

Biometric banking is undergoing a rapid technological transformation, offering secure, reliable, convenient, and contactless payment methods. Money service business (MSB), the term refers to a broader definition of financial institutions, encompasses money exchange, online payment platforms, money transfer operators, and remittance providers. MSBs have witnessed a major transition in recent years with technological innovation, face payment is one of the monumental innovations happened so far. 

Integration of Face Recognition Payment in MSBs

MSBs are largely implementing pay-with-face technology which authenticates and authorizes financial transactions by analyzing the unique facial attributes of the users. A unique facial profile for each user is created by minutely analyzing the distinct facial features and this profile is used to verify identities when someone is seeking to make potential transactions or entering into financial systems. Face recognition payments (FRPs) are transforming MSBs in multiple ways, the essence of which is shortly briefed here

1. Accurate Identification & Authentication of Customers

Rather than undergoing cumbersome verification processes or presenting physical ID documents, face payments make it seamless for users to get themselves verified accurately. This makes the authentication process faster and flags spoofed identities in real-time, combating the threats of fraudulent activities. 

2. Enhanced Efficiency & Expedited Transactions

Face payments offer expedited and efficient transactions, by quickly scanning the user’s face and matching it against the available registered identity dataset. Facial recognition payment systems enable faster transactions as compared to traditional methods of asking for passwords and other personal details. 

3. Improved Financial Inclusion

Face recognition payment enhances financial inclusion by offering secure and reliable payment options for individuals in underserved communications, who may not have access to bank branches or ATMs. 

Real-life Use Case Scenarios of Pay with Face 

Pay by Face in China 

Many areas in China have significantly dropped the use of cash for accessing services or purchasing products, especially after the COVID-19 pandemic. Many physical stores in China don’t accept cash payments, transactions are either made through mobile payments or scanning QR codes. China has introduced “pay by face” payment methods, where customers just scan their faces to gain access to services and are no longer required to carry wallets or even use mobile phones for making payments. A study reveals more than 495 million Chinese used the face payment method in 2021 to access multiple services, accounting for one-third of the total population. 

Moscow Subway in Russia 

In 2021, the Moscow Subway in Russia introduced facial recognition payment systems, enabling passengers to make payments just by scanning their faces. This metro system is one of the most crowded subways in the world and made history by becoming a pioneer in using check face ID for making travel payments. Over 240 stations have installed face recognition payment systems, making it effortless for passengers to make contactless payments. 

Key Concerns & Challenges in Adopting Biometric Payment Systems

Despite the remarkable applications associated with the use of face-recognition payment systems, there are potential challenges and considerations associated with their adoption. 

• Privacy Concerns: Users are concerned about the collection and storage of their biometric data, they often provoke questions about who has access to their sensitive information and how it is being utilized. Clear and transparent policies must be developed about how and why biometric information is processed and user consent must be included before collecting their confidential information to address privacy concerns. 
• Integration Cost: Adoption of face payment solutions requires potential investment in technology infrastructure and software development. In addition, significant cost is also required for maintenance, staff training, and software updates, making it challenging for small businesses to adopt the technology. 
• User Acceptance: Many users may have reservations about using face biometrics for potential payments due to unfamiliarity with the technology or security concerns. Educating customers about the potential of using face payments and giving clear explanations can effectively curb such issues. 

Secure Biometric Payments with Facia’s Facial Authentication Technology  

Yet, widespread adoption is hindered due to technical complexity, social acceptance, and privacy concerns. Businesses venturing into this journey must ensure that face recognition payment solutions have clear & transparent policies about biometric data processing and offer seamless payment methods, enhancing user satisfaction. Secure biometric payments with Facia, an AI-powered facial recognition solution, streamlining the enrollment, authentication, and authorization process. With a 0% false acceptance rate (FAR) and <1% false rejection rate (FRR), Facia accurately authenticates genuine individuals and flags fraudulent identities in real-time, enhancing the overall security of financial systems. 

Final Thoughts 

A survey about the adoption of passwordless authentication conducted by Statista in 2023 revealed that half of the businesses in financial services and retail are preparing to introduce passwordless authentication. Nearly 60% of the survey respondents revealed that they intend to replace passwords with biometrics. Biometrics form the foundation of passwordless authentications, and the emergence of biometrics in payments is significantly transforming the financial world, proving itself a reliable solution and catering to growing customer expectations.