While 2006 is expected to be the year radio frequency identification (RFID) contactless payment technology gains a foothold among vending operators, there are other technologies preparing to compete for a preferred position. Biometric payment technology may well become a popular settlement option.
For some time, biometric authentication seemed to be a technology in search of a quality application. The idea of linking personal characteristics (e.g., fingerprint, retina, iris, hand, face, etc.) to a database of settlement sources is beginning to be adopted in grocery stores and retail outlets across the country, and it may impact select vending accounts.
A significant attraction of biometric payment technology is its inherent heightened level of security as well as the ability to integrate with product-based marketing and frequent purchaser programs.
What is Biometrics?
Biometrics refers to the use of an automated system to verify personal identity through physiological or behavioral characteristics. Biometric technologies form the basis for highly secure identification and verification systems. With identity theft and fraudulent activity increasing, biometric-based solutions can provide increased security and confidentiality of personal and financial data.
More secure than PIN numbers, passwords, social security numbers and signatures, biometrics can authenticate an individual based on unique physical attributes that are difficult, if not impossible, to copy or forge. Although fingerprints are the most popular biometric characteristic used, other measurable traits include: iris, facial, voice, hand geometry and handwriting recognition.
A card, tag, fob or cell phone can be misplaced, lost or stolen. Fingerprints, on the other hand, are portable, reliable and always in the consumer’s possession.
Unlike a credit card or debit card application, biometric payment technology requires that the user register and create a settlement account in a closed cashless payment environment in which each supplier has a network of merchants that are part of the system. In other words, negotiability is limited to acceptance only at locations connected to the source of settlement information.
Enrollment involves proving one’s identity by scanning at least two fingerprints and entering some additional information into a database system. While some applications might require specification of a unique PIN code (a 4-digit number) or identifier code (e.g., a telephone number), all systems link the biometric payment to the consumer’s choice of payment source. To complete a typical transaction, the consumer swipes a finger, enters a PIN and selects a payment source.
How it works
Biometric payment technology allows the consumer to pay with the touch of a finger on a fingerprint scanner linked to a payment file. The fingerprint template is typically linked to a router and transmission media necessary to clear the transaction through an automated clearinghouse. While many biometric payment transaction providers focus on grocery, home improvement and convenience stores, others have indicated interest in quick-serve eateries, car wash locations and select vending operations.
Biometric payment providers (e.g., Pay-by-Touch and BioPay) require completion of a pre-enrollment process in which index fingers are scanned and driver’s license and banking information is recorded in an account database. This process reportedly takes less than two minutes.
In addition to transaction settlement, biometric payment providers may also link captured transactions to loyalty reward programs, gift cards, discount coupons and Web access services.
Rapid transactions and reduced fees
Just how fast can biometric payment systems process transactions? Pay-by-Touch and BioPay state transaction times range from 5 to 15 seconds, which they claim is favorable compared to cash, credit card or debit card settlement. While the speed of the transaction may be attractive, decreased transaction fees may be more persuasive as a selling point. Since a biometric payment transaction is treated as an automated clearinghouse debit, fees tend to be significantly lower (estimated at 75 percent) than comparable credit card or signature-debit card transactions.