• Catharina Eklof, CCO at IDEX Biometrics


• 12.09.2023 01:45 pm
#banking #payments

The financial gap still exists across many demographics in society. The visually impaired, displaced migrants, the unbanked, and people living with dementia are among those who would benefit from a more seamless, secure, and inclusive way of making payments and verifying their identity.

In late 2021, the World Bank Group reported that almost one-third of adults around the world remain unbanked. This equates to around 1.7 billion people, half of which come from the poorest 40% of the world’s population. Exclusion means inaccessibility to common financial services including savings accounts, loans, a credit rating, or even a bank account. Also left behind by the modern financial infrastructure are populations awaiting clearance to join a country’s financial ecosystem, such as migrants.

The financial gap for these demographics is only set to widen, given the growing reliance on digital and contactless transactions. In less than 10 years, the share of Americans not using cash for payments has increased by double digits, reaching 41%. By 2031, cash payments are expected to make up only  6% of all transactions. 

Biometric smart cards can bridge this gap for people in the Global South, migrant populations, and those with visual or cognitive disabilities worldwide, who deserve to feel secure, included, and independent.

A reliance on memory

COVID accelerated the transition from cash to contactless payments and the use of digital wallets, creating a challenge for many. By 2024, it is expected that digital wallets and cards will account for 84.5% of all e-commerce spend.

Digital transactions traditionally rely on the use of PINs that can easily be forgotten, as studies have found that we manage 100 passwords on average across various sites and services. In the US alone, consumers report relationships with more than three financial institutions and have more than four accounts per household. The challenge of password recollection is only growing. To counter rising cybersecurity threats, several countries now mandate two-factor authentication for retailers and service providers, creating further complexity.

However, organizations are responding to financial exclusion. Card provider Mastercard introduced its contactless PayPass offering, as well as its Touch Card developed alongside Amjan Bank which enables the visually impaired to distinguish between their cards. Both look to provide a better customer experience for people struggling with the digital changeover. For those living with dementia, Mastercard has also partnered with Sibstar and the Alzheimer’s Society to create a specific card where limits, transactions, top-ups and notifications can be viewed and managed via a complementing app. Likewise, Turkish neo-bank Papara introduced a Bluetooth debit card that provides visually impaired users with audio prompts when making payments.

Financial security left in the dark

There are at least 2.2 billion visually impaired people globally. In 2019, it was found that 89% of visually impaired have been victims of fraud or have made errors when paying for goods and services. This figure comes prior to the pandemic, and the proliferation of digital transactions, suggesting an even bigger concern today. 

PINs present an obvious security issue for this demographic, with others able to oversee their inputs and then manipulate them. Contactless payments go some way to solving that problem but pose the risk of fraud as there is no PIN verification below the increasing threshold amount, now at £100 in the UK, where the average annual wage is £27,756. In India, where the average annual wage is 9,45,489 rupees (roughly £9000), contactless limits are set to 5000 rupees (£48). Many accounts also require visual-based inputs to prove identity, such as CAPTCHA, proving as a barrier for the visually impaired.

Enhancing awareness on a regulatory level is key for driving change and reassuring vulnerable groups. The EU Accessibility Act is an example of how payment service providers are obliged to comply with accessibility standards. This includes making interfaces perceivable, operable, understandable, and robust, to ensure that individuals with disabilities can effectively navigate payment interfaces.

Progress through biometrics

Including braille on cards for easy identification is a crucial step for the visually impaired. This is also used on biometrics smart cards, with sensor textures to confirm the user has selected the correct method of transacting. These cards provide convenience, inclusivity, and security by linking a person's identity to their fingerprints, encrypted within the card itself, reducing data breach concerns.

Biometric smart cards work by attaching a person’s card to their identity. A card can only be used for a transaction via the one owner’s fingerprints. The data is encrypted and stored within the card itself, removing any additional fear of data being lost via a centralized breach or large-scale hack.

Biometrics extends beyond traditional demographics to serve the unbanked and those unrecognized in national infrastructures. In India, pension payment fraud has dropped by 47% thanks to bypassing the need for prior credit ratings or credentials. South America is one of biometrics’ earliest exponents, turning to the solution to cope with swelling population sizes, and the challenges of accessing proof of identity when setting up traditional bank accounts.

Liveness detection in biometrics is vital for financial aid programs globally, benefiting vulnerable groups. Securing remittances through biometric authentication ensures transparency and better fund control. Directing funds to cold wallets or biometrically authenticated cards improve program efficiency, safeguarding the interests of individuals and communities.

Overall, the biometrics market is expected to grow to US$87.4 billion by 2028, at a CAGR of 17%. Its general value as a simple and secure alternative to everyday transactions is growing each year. You can’t, however, put a price on the impact that biometrics will also have on those who have so far fallen through the gaps of finance’s digital revolution.