FPC Explains How Biometrics Can Alleviate Contactless Payment Fraud Concerns

Fingerprint Cards (FPC) is arguing that biometric payment cards can help mitigate some of the anxieties that consumers feel when making contactless payments. The company specifically looked at the UK, where the contactless payment cap jumped from £45 to £100 in October.

A higher payment cap should ostensibly deliver a better customer experience, since it allows people to make more purchases without needing to enter a pin. In practice, however, it can be a source of stress for merchants and consumers alike. Consumers are worried that fraudsters will be able to get away with more money if their card gets lost or stolen. Merchants, meanwhile, are worried about walk-off fraud, which occurs when someone taps to pay and does not realize that a PIN was required for that transaction (the new UK law still requires PIN verification if the cardholder exceeds £300 in consecutive transactions).

With that in mind, some British retailers have indicated that they will not implement the new contactless cap, and will instead stick to the safer £45. That is likely to create more confusion amongst the public, since people will not know whether or not the need to enter a PIN when they take out their card in different stores.

As it stands, 53 percent of the British public were worried about contactless fraud before the limit increase, while 26 percent were worried about confusion at checkout. Some banks are allowing customers to deactivate contactless payments or set their own personal contactless limits to assuage those fears, and to mitigate their own potential losses. Contactless fraud rates are currently low (around 2p for £100), but that number could increase with a higher limit, and banks and card issuers are obligated to refund the victims.

Biometric payment cards offer a potential solution to that problem. The use of fingerprint recognition adds a layer of biometric authentication to each transaction, and it does so while delivering the same level of contactless convenience. That helps guarantee that contactless transactions remain secure, regardless of the payment cap, and encourages merchants to adopt more consistent contactless payment policies.  

FPC noted that contactless payments in the UK went up 90 percent over the course of 2019, and now account for 57 percent of all in-store transactions. There is also strong interest in biometric cards, with 62 percent of the British public indicating that they would switch banks to get their hands on a biometric payment card. NatWest and Royal Bank of Scotland have both conducted biometric card trials in the UK using fingerprint technology from FPC.

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November 26, 2021 – by Eric Weiss