The banking world at your fingertips: A guide to biometric payments

The world of banking and financial technology has come a long way in recent years, with card payments fast replacing cash as Australia’s preferred payment method, and emerging payment technologies such as mobile wallets and wearable payments becoming increasingly popular alternatives.

But as the pace of technological change continues to tick along briskly, one of the innovations Australians can expect to be using on a day to day basis are biometric payments.

It may sound like a fancy term, and one that conjures up images of something out of The Terminator, but in reality ‘biometrics’ are quite straightforward - the term simply refers to the calculations and measurements of the human body. In the world of technology, biometric authentication relates to the parts of the body which can be used for identification - fingerprints, retinas, your voice and your face, for instance.  

So what does any of this have to do with being able to buy your groceries or pay for your morning coffee?

Consider the way payments have shifted in just the past few years. From using a card or mobile wallet to pay, with verification before making a purchase over a certain amount (usually $100) in the form of a pin or passcode, to today's super-charged tap and go society.

Biometric authentication use fingerprint scans or facial recognition to verify payments. While this still currently requires an extra step - a tap, and then a facial scan, for example - we could see this continuing to shift as technological innovations march forwards.

Believe it or not, these forms of authentication aren’t new. Fingerprint scans have been used in the United States and other countries as a way to pay for over a decade, and if you own a smartphone you’re probably already familiar with using your fingerprint as a form of security.

Simply put, biometrics payments have improved the current payment system in two ways: security and convenience.

As credit card use has become more and more popular in Australia, so too has the prevalence of credit card fraud. In fact, figures from the Australian Payments Network  revealed that credit card fraud cost Australians $495 million in 2021. As card use becomes more and more popular, increased security will be a necessity to ensure that Australians remain secure in their card use - biometrics have added one layer of this.

Because of the unique characteristics and accessibility of the features of your body (you’re unlikely to be travelling anywhere without your fingerprints right?), payments which encompass biometrics as either a partial or full form of security are ideal for protection against fraud and scams.

With the potential future elimination of pins and passcodes altogether when making payments, the introduction of biometric authentication could also prove to make payments more convenient for consumers. In fact, we've already seen examples of people - quite drastically - inserting payment chips into themselves  for use with tap payments. If those are verified via biometrics, your body has replaced your wallet completely!

Currently, biometric authentication is used as part of mobile wallet technology. Mobile wallets - which are essentially apps for your smartphone which allow you to make contactless payments at a point of sale (POS) - have gained major traction among Australian technophiles.  

Many smartphone users may already be aware of their option to pay using a mobile wallet, with an increasing number of Australian banks and financial institutions offering services such as Apple Pay, Samsung Pay and Android Pay. For a more extensive overview and list of providers who offer these services, check out our handy guide to paying with your smartphone.

As with many types of emerging technology, one of the major concerns about biometric authentication is the privacy of individuals. While the technology is expected to increase the security of customer payments and prevent things like card fraud, critics have raised questions  about the ability of banks and providers to keep their customers details safe.

Rather than storing the actual details of an individual - such as a fingerprint or facial scan - in a database, providers are instead expected to keep an encrypted number in their records which will be generated from the measurements of a fingerprint or facial scan.

For fans of the good old pin, there’s certainly some uncertainty about whether passcodes of any sort will remain a fixture of payment security in the future. They're already hard to come by unless you actively want to use them! As Mastercard has shown in both of its ‘Identity Check’ proposals in Australia and the United Kingdom, biometric authentication can either be used in conjunction with a passcode or pin as a form of two factor verification, or as a complete replacement.