By Thomas Rex
Canada has embraced the mobile revolution. With smartphone penetration at 72.1 per cent (the global average is just 32 per cent)1, it’s also one of the few countries globally to accept the three major “OEM Pay” platforms: Android Pay, Apple Pay and Samsung Pay. Offering convenience, “cool” and a range of value-added services in consumers’ hands, it’s unsurprising that many Canadian banks are adopting a mobile-first strategy2.
This trend has seen some claim that the card is dead—or at least, dying—but banks should take care not to narrow their fields of vision too far. Customers like flexibility and options in their financial lives.
Despite the growth of mobile payments, cards continue to dominate Canada’s payments landscape3 and contactless card payments have seen rapid adoption, making the country one of the leading markets for them.
But the humble payment card must not stand still. Instead it must evolve to meet the demand for the same seamless and, importantly, secure contactless user experience that mobile provides. This is why mobile and cards must work together.
Contactless card concerns
Canadians prioritize speed and efficiency when it comes to payments4. Contactless cards can match the speed and convenience of mobile, but a crucial piece of the puzzle has been missing, namely strong authentication to minimize fraud.
Signatures are insecure, PINs are limited and consequently, and understandably, many consumers are still hesitant about using contactless. A recent study found that 55 per cent of Canadians not utilizing the contactless feature on their cards said they were not comfortable tapping”5.
Biometrics offers a way forward. Consumers are already familiar with biometric authentication from the mobile world as a means of adding security without compromising usability. Indeed, 85 per cent of Canadians are very interested in biometrics to verify identities to make payments6. Far from killing cards, the use of biometrics in mobile payments has paved the way for a logical evolution of the contactless card.
Introducing the biometric payment card
Biometric technology is the key to combatting these security concerns without compromising on the user experience (UX). Biometric smart payment cards would have ultra-thin fingerprint sensors; users can simply place their fingers on them when they tap, which authenticates transactions in under a second. As all biometric data is stored securely in the cards’ secure elements, all sensitive biometric data remains encrypted in possession of the users and cannot be accessed should the cards be lost or stolen.
In short, consumers can have all the speed and convenience of contactless payments with the added confidence and security of biometrics.
Cards and mobile: a win-win
Many banks and retailers are seeing mobile as central to their strategy to improve customer experience and satisfaction. But crucially, they need not to overlook cards now that biometrics can unify the authentication experience.
Unlike with mobile pay platforms and wallets, biometric smart card users can enjoy the same seamless UX at any contactless terminal, regardless of the country, point of sale (POS) infrastructure, smartphone model or battery level. As the cards’ fingerprint sensors are powered by the payment terminals, just like contactless cards, there are no batteries to recharge or upgrades to make to the existing terminal infrastructure.
Payment schemes ensure cards entering the system will work securely and in-line with international and domestic requirements, including EMV and ISO standards. As such, a biometric payment card issued by a bank in one country can be used to make payments safely in another. Banks will be able to know who is paying and consumers can have confidence that their money is safe.
With improved security, banks are also given the confidence to scrap the payment caps, thereby offering even more flexibility and freedom for “tap and go” payments. This will in turn increase both spend and throughput for retailers, as well as bringing increased loyalty and trust to banks through fraud reduction. Everyone’s a winner.
There’s no “one size fits all”
If the evolution of payments has taught us anything, it’s that trust and convenience drive adoption. However, the fact remains that there is no “winner” when it comes to payments. Consumers demand options and flexibility, choosing different methods of payment depending on the type of purchase. Banks must meet this need.
Mobile payments and adjacent services will undoubtedly form a big part of Canadian banking strategies but neglecting the payment card would be short sighted. By taking the Canadians’ love of contactless and adding the security of biometrics, the biometric smart card can offer the perfect partner to work in tandem with mobile.
And just think of how these technologies could combine in the future. What if the location services within your banking app were used to confirm that your smartphone was within 10 metres of a shop where your card was used?
Biometric smartcards are the natural next step for the Canadian market. They add trust to contactless without compromising experience while giving banks the confidence to scrap that niggling payment cap. What’s more, when combined with mobile, it creates a consistent, trusted customer UX to payments.
This balance of choice with familiarity, security and convenience, is met perfectly by biometrics. Secure payments, at your fingertips. Watch this space, Canada!
Thomas Rex is senior vice president of smart cards for Fingerprint Cards AB (www.fingerprints.com). He has 30 years’ experience in the telecoms and mobile industries. Fingerprint Cards’ solutions are found in hundreds of millions of devices and applications and are used billions of times every day.
1 Newzoo, “Global Mobile Market Report”, report, September 11, 2018.
2 TSYS, “2018 Canadian Consumer Payment Study”, study, November 27, 2018.
3 Michael Tompkins and Viktoria Galociova, “Canadian Payment Methods and Trends: 2018”, Payments Canada, report, December 10, 2018.
4 “Canadian Payment Methods and Trends”, Ibid.
5 “2018 Canadian Consumer Payment Study”, Ibid.
6 Mike Lloyd, “Most Canadians interested in biometrics replacing passwords: survey”, News 1130, January 10, 2018.