PINDROP BLOG

The Selfie is the New Payment Biometric

Banks, credit card companies, and other financial companies are turning over every rock in an effort to fight fraud, including trying out novel authentication techniques. The latest move in this area is toward facial recognition via smartphones as a way to ensure the person making a purchase is who he claims to be.

After decades of just taking someone’s word, or possibly forged signature, as a form of authentication for credit card transactions, card issuers have spent the last several years casting about for better ideas. Some issuers have tried putting digital photos of customers on their cards, while others have offered one-time passwords. But the system that most issuers have settled on is chip-and-PIN, which uses the combination of an on-card chip and a user’s PIN or signature for authentication.

MasterCard has been testing a new system that allows users to take a picture of themselves using their phones, enroll that with the card issuer, who will then use it for comparison in future transactions. Customers can choose to use facial recognition rather than a password or PIN when making a purchase. The system has been tested in the United States and is soon to be rolled out in the U.K., according to The Stack.

One of the main problems that the system is designed to address is transactions that are declined by mistake. Customers who use their cards in foreign countries or make purchases that are out of their normal buying patterns will sometimes have those transactions declined, because they look like fraud to a card issuer’s detection systems. That can be a frustrating situation for consumers, but it can sot the card issuers a lot of money over time if those transactions aren’t ultimately approved.

MasterCard said that these wrongly declined transactions amount to $118 billion a year, which dwarfs the $9 billion of actual credit card fraud that occurs annually. The facial recognition part of MasterCard’s program is done through an app, similar to the way that some banks allow customers to use the fingerprint sensor on an iPhone for authentication for mobile banking.

The option to use facial recognition as a form of authentication may come as a welcome addition to many users, especially in the U.S., where the rollout of chip-and-PIN over the last few months has been a frustrating experience. Many retailers in the U.S. that have chip-ready terminals installed still don’t accept chip-and-PIN transactions for a variety of reasons. Some retailers’ networks aren’t ready for those transactions, negating any additional security afforded by the chip on the card.

MasterCard also is testing several other kinds of biometrics for different types of payments, including measuring users’ heartbeats.

Image from Flickr stream of Delphine Savat.

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