What if all people had to do is to wave their palms over a scanning device at the gas station pump to pay for gas? Would not it be so much easier for people to scan their fingerprints at the cash register, to pay for their groceries at the store? Since, biometric methods of payment or identification shows promise to enhance security, reduce identity theft, and eliminate other related financial crimes; will payment authentication using a person’s registered DNA like fingerprints, palm prints, voice recognition, or iris features identification, replace the use of physical cash in commerce in the next 10 years? Will the use of biometric payment methods like pay by touch or scan, be the future for payment processing in retail? Financial security and illegal activities prevention are key issues for financial institutions, law enforcement, government, businesses and consumers alike. For these very reasons, biometric systems can provide increased security and stronger authentication for both commercial and consumer financial transactions.
According to Jeff Lengerderfers and Stefan Linnhoff’s Journal of Consumer Affairs Report, titled “The Emergence of Biometrics and its Effect of Consumers”, “Biometric authentication systems are becoming increasingly common” (Langenderfer, J., & Linnhoff, S. 314). Point of sale biometric payment systems is well on its way to becoming the standard in the United States and international commerce. In 2003, Point-of-sale biometrics represented 2% of the biometric market generating $16.1 million and will rise by over $250 million by 2008 according to International Biometric Group (Langenderfer, J., & Linnhoff, S. 314).
The increase in the demand of the commercial and government use of biometrics is due to the exponential increase of financial crimes and identity theft the last ten years (Langenderfer, J., & Linnhoff, S. 315). There are many advantages to biometric authentications from a consumer standpoint; it reduces the risks of fraudulent activities like identity theft, credit or bank crimes. Using biometric recognition for financial transactions will make it difficult for criminals to steal information over the internet or conduct fraudulent financial transactions in-person. Currently, hackers can easily breach a network or steal a computer containing sensitive financial and personal information to exploit and abuse the information for their financial gain. Biometric identification makes it difficult for criminals to hack someone else’s DNA, to access financial or other sensitive information (Langenderfer, J., & Linnhoff, S. 315). It makes it difficult for criminals to use another person’s DNA making it promising for consumers to live in a fraud free economy.
Consumers will also benefit from eliminating a lot of the items they carry everyday like credit cards, physical cash, and identification cards (Langenderfer, J., & Linnhoff, S. 315). All the information containing a person’s identity, financial accounts, insurance policies, medical records, and other pertinent records will all be contained in the person’s DNA. Purchasing a cup of coffee will be a breeze to the consumer by simply waving their palm or scanning their fingerprints to a device. The buying experience increases positively for the consumer because the wait time drastically reduces with biometric point-of-sale systems versus paying with cash, credit, or check to complete a transaction.
Biometric Technology Today estimates that two thirds of shoppers will use biometric payment solutions in retail by 2015. Retail shopping is going to change through biometric technology and some countries have already adopted different systems in retail stores. 3D body scanners and biometric point-of-sale processing are in a few dressing rooms of clothing stores abroad. In China, some companies use 3D attendants instead of real people to sell products and in Germany they favor the use of 3D body scanning for authentication. With all the different biometric systems available, 41% of consumers still favor fingerprint scanning as the preferred method of payment in retail. Fingerprint payment is favorable to a large percentage of people in eight different countries surveyed. The use of fingerprinting to replace cash is particularly attractive to a wide range of consumers worldwide (Biometric Technology Today 1).
60 per cent of consumers worldwide believe that they will be able to pay for purchases using just their fingerprint by 2015 – with this innovation rated top by the greatest proportion of people questioned. The UK is most in favour of this shopping solution – with 31% giving it the top vote (1).
While biometric payment solutions appeal to many different countries, government agencies, enterprises, and consumers around the world, biometric transaction processing will be extremely tough to implement. The technology is still remarkably expensive compared to credit card and mobile phone payment solutions. The implementation of the technology will require a technology overhaul to support the database. There will be significant cost to replace existing hardware and software to support the latest technology. Also, it will take effort and time to obtain the biometric identification of the general public to use for the new systems. (Is there a future for biometrics in retail? (2008). MarketWatch: Global Round-up 207).
In 2008, a leading biometric transaction processing company in the world, Pay Touch, failed to grasp the retail market because of the expensive cost and the high error rate of the system leading to their demise. The issues experienced with Pay Touch’s systems outweighed the minor benefits its customers received. Although the company faced challenges and failed to penetrate the market with its technology, biometric fingerprint payment solutions are still a sought after innovation with retailers, banks, and consumers. Currently, biometric payment solutions like fingerprint payment processing, continues to be a niche solution in the market. High volume retailers demand a solution that will help increase the speed of their checkout processing minimizing wait times. Retailers look to innovations like biometric technology as a way to solve this problem (Is there a future for biometrics in retail? (2008). MarketWatch: Global Round-up 207). Companies like Pay Touch and other leading biometric payment solutions providers will continue to work on developing their technologies to meet the demands of the retail market.
DNA for Currency: The Challenges
Despite the demands of retailers, financial institutions, and governments agencies to use biometric innovations, the adoption of biometric authentication and payment methods, poses many potential implications to consumers. The main concerns are awareness, privacy, choice, participation, accuracy, and security. Most consumers’ concerns are about their privacy rights as it relates to biometric identification. There are still many questions that the public has regarding this technology and how it will be rolled out in the United States. Some of the questions are: How and where will the information are collected? Will the consumer know what information is gathered? Will the consumers, have the choice and opt out of biometric payment if they choose to? How accurate and secure is the system? What are the rights of the consumer if their identification is breached, or the wrong information is added to the recorded file of a consumer? Consumers are going to demand guarantees of privacy and transparencies from biometric payment processing companies along with the governing agencies. Until all of the questions raised are answered, the public will be hesitant to convert. Some will challenge the system and take their petitions to the courts to dispute any violations of privacy rights (Langenderfer, J., & Linnhoff, S. 323).
A number of years ago, in Oregon, an innocent man spent weeks in jail when his fingerprints matched a notorious drug dealer. The man did not look anything like the criminal, but because the fingerprints were recognized in the system as a match, he was apprehended. Six weeks later he was released with the help of an attorney. Once biometric systems become a household technology, issues like this will be inevitable, and it will take social and financial toll on the wrongfully accused or mistakenly identified as another person (Langenderfer, J., & Linnhoff, S. 329). If a person is wrongfully identified in a financial transaction, an innocent person will pay consequences and may spend weeks or months correcting a mix up. Correcting financial records embedded in a DNA like a fingerprint will be a daunting and enormous burden for the consumer.
Currently, consumers are already facing issues with companies sharing information for marketing purposes. Tracking consumers spending habits through biometric systems, is an ideal way to gather valuable marketing information since the data is gathered from a single source, the consumer’s DNA. Currently the tracking is gathered from multiple sources making it difficult for companies to get accurate data of consumer spending habits. If biometrics replaces cash and other payment methods, the information gathered will be much more accurate as it narrows the data to a single database. It will just be a matter of time when consumer information is commercially exploited. This exposes consumers to get bombarded with unwanted information or offers from marketing companies. This is a significant obstacle for biometric technology companies along with governing agencies to regulate. For consumers, this is also a challenge since private information can potentially be exploited for financial and other agendas.
First Biometric Money in the World
In Ghana, South Africa, the world’s first regulated biometric money supply is already available. The Ghanaian Central Bank implemented a project called the e-Zwich will makes Ghana one of the first country to become a cash-free economy. The use of biometric identification in South Africa originally is to provide universal identification of its citizens. That use was eclipsed by the demands of Ghanaian Central Bank to use as the primary method to move cash within the country. The biometric identification program in Ghana has allowed the banking system to reach its people in even the most remote of places. The use of a card imbedded with a microchip that includes the encrypted fingerprint of the individual allows the Ghanaian Central Bank to monitor and track all of the transactions of its registered citizens. There are still a substantial amount of people that has not been registered, or has access to the E-Zwich card, but a large majority of people, are already using this cashless system (Breckenridge, K.).
If the Ghanaian Central bank is successful in rolling out the e-Zwich card to all the citizens of Ghana that the bank will be able to track the economy and this roll out will be a historical success for Ghana. The fingerprints of the citizens will be in the banking database, and it can match any individual in the database quickly and identify against the documented population (Breckenridge, K. 653). The challenge in implementing biometric technology is that the poor will find a way to challenge it to avoid the agenda to monopolize the financial structure of Ghana. The poor will not want to be watched by the government and use biometric currency. The technology is still fairly new to the area, but because the grant distribution happens through the e-Zwich cards, it is just a matter of time that this becomes widely accepted and used in the area (Breckenridge, K. 656).
Biometric Money is Just Around the Corner
In the United States, the government has ambitious plans to roll out biometrics in airports, access secured areas, hospitals to access health records, grocery stores, and other areas. The idea is when the general public uses the technology in general areas people will be more accepting to use biometric methods to replace the use of cash in retail use. This explains the government’s ambitious plans to move ahead and introduce biometric technologies in various ways; it is to desensitize the general public and remove any opposition with moving towards a cashless economy using biometric technologies (Is there a future for biometrics in retail? (2008). MarketWatch: Global Round-up 2).
Mobile technology today is still the widely used cashless method to pay for goods and services globally. Mobile payment systems are also acceptable to consumers, and it is much more reliable. Biometric systems are still flawed. This causes serious implications to the user and may make it difficult to argue wrongfully processed transactions. The technology still has to be proven safe and reduce the error rate before it can be widely accepted as the primary source for commerce. Until then, the accuracy of biometric payment processing is still questionable (Is there a future for biometrics in retail? (2008). MarketWatch: Global Round-up 207).
Biometric authentication technology to replace cash in a global economy has many benefits like reduced financial crimes, enhanced security, improve consumer convenience, and reduced identify theft crimes. This is also hugely intrusive to the consumers (“Big Brother”). Governmental agencies and commercial organizations may exploit the sensitive information of its citizens, for a bigger hidden agenda. As long as the consumers do not lose their rights to their information and the correct regulatory policies are in place, the promise of enhanced security and convenience of a cashless economy may well just be around the corner.
Langenderfer, J., & Linnhoff, S. (2005). The Emergence of Biometrics and Its Effect on Consumers. Journal Of Consumer Affairs, 39(2), 314-338. doi:10.1111/j.1745-6606.2005.00017.x
Is there a future for biometrics in retail? (2008). MarketWatch: Global Round-up, 7(11), 206- 208.
Two thirds of shoppers to use biometrics by 2015. (2008). Biometric Technology Today, 16(5), 3-4. doi:10.1016/S0969-4765(08)70131-0 Breckenridge, K. (2010). THE WORLD’S FIRST BIOMETRIC MONEY: GHANA’S E-ZWICH AND THE CONTEMPORARY INFLUENCE OF SOUTH AFRICAN BIOMETRICS. Africa: Journal Of The International African Institute, (4), 642. doi:10.2307/40961507
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