Race to acceptance: biometrics in retail technology

As the holiday season approaches, we are all left with the gnawing anxiety of what to get our loved ones. Between the latest generation of tech products, that cool air-fryer you saw on a commercial or the eccentric sneakers your child has been going on about—we are never really sure. As wonderful as the season is, consumers and retailers alike need to be weary of fraud. Research estimates that the holiday season brings about an estimated 20% increase in fraud occurrences. Some fraud tactics include:

Buy online and pick up in store
Package tracking phishing
Fake e-commerce stores
Account takeover

The holiday sales season is a busy and chaotic time: merchants and customer service team members are over-stretched, the IT team is trying to keep overly busy servers from crashing, and the new temporary holiday staff have not been sufficiently trained. These factors make it easy for fraud occurrences to take place and exploit the flaws in websites, payment methods, and authentication processes. Mastercard anticipates that this 2021 holiday season will be the strongest one on record. The recent spike in fraud occurrences worldwide have forced many to adopt stronger authentication methods. Adoption of biometric authentication technology has been accelerating since the onset of the pandemic—driven primarily by consumer demand for contactless solutions. Once deemed as futuristic technology, biometrics have been disrupting virtually every industry. The technology has proven to be secure as a stand-alone option and can be streamlined into current authentication methods. Its adaptability makes it user-friendly and convenient.

Biometric technology is not new

Biometric technology is not exactly new, and society will continue to see more of it. The growing consumer demand for touchless and convenient solutions due to the COVID-19 pandemic has businesses thinking about how they can improve and simplify their customer experience. Biometrics are unique identifiers such as fingerprints, face, eyes, veins, and/or palms. These identifiers are unique to each person, meaning no two individuals can have the same identifier. The technology then uses these identifiers to verify the individual.

Biometric technology can be found in:

Mobile devices: The modern cellphone has facial or fingerprint recognition features that allow users to bypass pins or passwords. The feature is optional, but its presence alone shows that the technology has become advanced and affordable.
Home assistants: Advanced tech devices like the Google Home and Amazon’s Alexa have seen a huge adoption in recent years. Whether the light needs to be turned off or food purchased, home assistants have successfully made life a little bit easier. Voice recognition biometrics makes all this possible.
Banking: Finance and banking institutions have fully embraced the use of biometric authentication in online banking and in their onboarding process. In many mobile banking apps, biometric solutions such as facial or fingerprint recognition are used to bypass passwords and securely authenticate user identity. Biometric technology has enabled banks and financial institution to remotely onboard their customers, meeting the increased demand for touchless solutions.

Biometrics in retail technology

Biometric technology will serve to improve customer experience in the coming years, with a core focus being on the supply chain. As mentioned above, COVID-19 accelerated the adoption of technology due to the increased consumer demand for touchless solutions. Even though lockdown restrictions have lessened, consumers will continue to prioritize hygiene. A study by The Strawhecker Group and the Electronic Transactions Association showed that 27% of small business survey respondents have seen an increase in mobile wallets and contactless card payments since the start of the pandemic. And many predict that in 3-5 years, contactless payments will supersede cash and traditional credit cards.

Contactless payment methods come in primarily two forms, digital wallets, and biometric payment cards. A digital wallet contains digital versions of your credit and debit cards that are stored in wallet apps on your mobile device. To authorize a transaction, the end-user’s identity is verified with either facial or fingerprint recognition. Currently, biometric cards are in pilot as payment processing companies want stronger authentication without disrupting the card manufacturing process. In a biometric payment card, the end user’s identity is verified with fingerprints instead of a standard pin. The biometric card combines chip technology and with fingerprints to verify the cardholder’s identity conveniently and safely for in-store purchases. The cardholder’s biometric data does not leave the card at any point, as the biometric capture and match is done on the card.

Additionally, biometric technology will be streamlined into ecommerce stores to further provide security for shoppers.  Online purchases comprised 16% of total retail sales in 2019, which was a 14.9% rise from the year before. As online purchases continue to rise, it is imperative that users feel safe and secure against looming threats of fraud. For online businesses, customer authentication for online payments can come at a cost. Research estimates that 40% of ecommerce transactions are impulse buys, any interruption to the transaction gives a customer a chance to rethink the purchase. Biometric technology aims to provide a smoother payment system as it is frictionless, requiring the end-user to provide nothing but a face or fingerprint. A new study from Juniper Research has found that biometrics will authenticate over $3 trillion of payment transactions in 2025, from just $404 billion in 2020.

Biometrics improve consumer experience and provide safer authentication

Biometric technology has seen an increase in adoption and use over the past 20 months. As a result, retailers are rushing to meet the demand by incorporating options for consumers to continue safely to shop both online and in-store. In recent years, society has welcomed the technology in mobile devices, home assistants and mobile banking applications. It provides consumers with the option to not only get rid of passwords but conduct transaction securely. Biometrics will continue to lead the way in the fight against fraud occurrences, delivering a safer and secure method to conduct transactions. Biometric technology has proven to be secure, fast, and easy-to-use and retail serves as a new use case for the technology.