How Biometric Payment Cards Can Stifle Fraud Problems
Through Lina Andolf-Orup, Senior Director, Global Marketing at Fingerprint Cards
Contactless payment technology arrived in the UK in September 2007. Like the rest of the world, UK consumers have come to love the convenience of contactless, which now represents 57% of all in-store transactions after 90% growth between 2019 and 2020.
Recognizing the advantages of contactless, by March 2021, it was announced that the limit would more than double from £ 45 to £ 100 (USD 137), which went into effect in October 2021. This placed the UK among the highest limits in the world.
Although the increase in the limit has opened the door to more tap and go transactions, existing concerns are likely to intensify. In search of a solution, the United Kingdom may turn to the banks in France, Switzerland and Mexico and their launches of the biometric payment card.
Rising limits, growing worries
Initially, the £ 10 cap limited consumers to low-value items. However, over the years the limits have increased. From £ 10 to £ 15, then £ 20, £ 30, then £ 45 at the start of the pandemic, before finally skyrocketing to £ 100 in October 2021. Compared to the early days of only being able to buy a cup of coffee shop and newspaper, consumers can now use contactless for items such as their weekly family grocery store or a full tank of fuel.
Yet the UK has not escaped contactless skepticism. Even before the limit is increased, 53% of UK consumers were concerned about the risk of contactless fraud if their card was lost or stolen, and the new limit didn’t help.
Consumers can now spend £ 300 before a PIN code is needed, leading the media to label contactless cards a ‘thief dream‘. To exacerbate these concerns is the research of the consumer watchdog Who? who found, in 2016, some banks were not protect consumers against contactless fraud. While banks may have taken a more robust approach since then, stories like this do nothing to calm consumers down.
It is not only consumers who face the risk of higher losses. To help protect customers, UK payments regulators have expanded credit regulations, forcing banks and issuers to reimburse the victims contactless fraud, opening up the possibility of increased losses.
A mixed reaction to the new limit
Looking at the reaction of the UK payments and retail ecosystem, there are signs that the £ 100 limit has not been met with as much enthusiasm as some might have hoped.
An industrial body for UK retailers, the response from the British Retail Consortium underlined that not all retailers plans to implement the new limit. One of the biggest concerns is the risk of more losses contactless walk. This happens when a consumer accidentally fails to pay for their purchase after failing to notice that a PIN is required. This happens either when they have reached the limit of consecutive contactless transactions or when the cumulative value of contactless transactions has been reached. While this is less of a problem at staffed checkouts, it poses a significant risk with self-service machines.
Currently, levels of contactless fraud are relatively weak – equivalent to less than 2 pence in £ 100 in 2020. However, that was before contactless cards became a more lucrative target for criminals. Banks need to be proactive to minimize the risk of higher contactless limits in order to maintain confidence in the technology.
The mixed response does little to support clarity among consumers on contactless limits. For example, if a customer expects to pay £ 100 with a contactless card, but the retailer hasn’t enforced the limit, it could be confusing, and possibly angry, at checkout, compromising the overall convenience of contactless.
A growing and shifted burden
Following the introduction of the £ 100 limit, banks adopted varied approaches to maintain confidence. A method deployed by some banks allows customers to set their own limits or even completely disable contactless – a tactic that consumers seem to favor.
Along with customer control of contactless limits, banks are reminding them to be more vigilant with their cards and to check their statements more regularly. It makes sense from the bank’s point of view; they must act to support customers. But giving customers the extra responsibility to mitigate the risk of fraud can potentially derail the progress made by contactless technology to become the preferred payment method in-store. And it shouldn’t be.
To ensure that consumers continue to use and trust contactless technology as the limits increase, banks can instead use the robust security and frictionless experience provided by biometrics. The success of this approach is visible in mobile wallets, with some UK banks advising clients to explore their use following the increase in the contactless limit.
Since mobile wallets require authentication for every transaction and often use biometrics to do this, the introduction of biometrics in payment cards will bring consistency to the in-store card and mobile payment experience – biometrics being the authentication bridge between them.
Bringing biometrics to Britain
With biometric payment cards, banks, issuers, retailers and consumers can unlock the full potential that contactless brings to in-store payments. Along with added protection that reduces the risk of fraud and lost income, it offers the convenience of avoiding contactless limits altogether – and the confusion they can bring – altogether.
The building blocks are in place for biometric payment cards to reach the mass market. Milestones such as achieve new compliance, strategic collaborations and exciting technical innovations continually lower market barriers.
There are already important UK interest. When asked UK consumers if they preferred a biometric payment card, 48% said ‘yes’, 62% would switch banks to get one and 42% would pay extra for it. NatWest and RBS have taken the lead in identifying the potential for biometric card technology and have undertaken pilot tests.
Going forward, banks and issuers need to ensure they support customers by adding strong authentication to the contactless “tap”. In doing so, they can take an important step in reducing the worries intensified by higher non-contact limits.
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