By Don Quijones of Spain, the UK, and Mexico, and an editor at Wolf Street. Originally published at Wolf Street
Mastercard has set a deadline for widespread use of biometric identification for its services across the whole of the EU: April 2019. Mastercard Identity Check, currently available in 37 countries, enables individuals to use biometric identifiers, such as fingerprint, facial, and iris recognition, to verify their identities when using a mobile device for online shopping and banking. The technology is not mandatory for customers, but from next year it will be vigorously promoted throughout the EU and many consumers will welcome it.
The impact will be felt not just by consumers but also by most European banks, since any bank that issues or accepts Mastercard payments will have to support identification mechanisms for remote transactions, alongside existing PIN and password verification. The deadline will also apply to all contactless transactions made at terminals with a mobile device.
Citing research it carried out with Oxford University, Mastercard says that 92% of banking professionals want to introduce biometric ID. This high number shouldn’t come as much of a surprise given the vast untapped value consumer data holds for banks and corporations as well the preference most banks have for electronic transactions. The study also claims that 93% of consumers would prefer biometric security to passwords, which is a surprise given the array of thorny issues biometrics throws up, including the threat it poses to privacy and anonymity and its deceptively public nature.
“A password is inherently private,” says Alvaro Bedoya, Professor of Law at Georgetown University. “The whole point of a password is that you don’t tell anyone about it. A credit card is inherently private in the sense that you only have one credit card.”
Biometrics, on the other hand, are inherently public, he argues. “I do know what your ear looks like, if I meet you, and I can take a high resolution photo of it from afar,” says Bedoya. “I know what your fingerprint looks like if we have a drink and you leave your fingerprints on the pint glass.” And that makes them easy to hack. Or track.
According to Mastercard, such concerns are not nearly as important to its customers as the promise of convenience, speed and ease of use. “[Biometrics] will be of great benefit to everyone: consumers, retailers and banks,” said Mark Barnett, President, Mastercard UK & Ireland. “It will make the purchase much smoother, and instead of having to remember passwords to authenticate, shoppers will have the chance to use a fingerprint or a picture of themselves.”
In other words, consumers will not have to use safer two-factor authentication — biometrics plus a PIN or password — if they don’t want to. Convenience is, as ever, the watchword. Card companies, banks and online retailers have good reason to prioritize speed and convenience. The quicker and easier the payment method, the more likely consumers are to complete the transaction. Compared to other methods, such as one-time SMS passwords, biometric authorization can decrease the “abandoned basket” rates by as much as 70%, according to the study.
VISA and it has just published a similar report claiming that consumers in India are equally keen to use biometrics for authentication. In this case a staggering 99% of the people surveyed said they are personally interested in using at least one biometric method to verify their identity. An equal number of participants — another staggering 99% — said they are interested in using at least one biometric method to make payments. VISA will no doubt be happy to oblige.
The roll-out of biometric-authenticated payments across Europe, in India, and in Mexico, is merely the latest example of the accelerating encroachment of biometrics into everyday life. Most national passports these days include biometric data. Driver licenses in the US (which serve as de facto ID cards) already have them or soon will. Meanwhile, millions — perhaps soon billions — of people have volunteered their digital fingerprints to log into their smartphones and other digital devices. In other words, people are already giving away their most private data to work, communicate, cross borders, or get on planes.
In China, where privacy concerns are given even less importance than in the U.S. or Europe., authorities have been collecting DNA samples, fingerprints, eye scans and blood types of millions of people in the province of Xinjiang, the only Chinese territory apart from Tibet where ethnic Han Chinese are not in the majority.
In Macao Chinese gamblers taking out money from some ATMs have to look into a camera for six seconds so facial-recognition software can confirm their identity. “This is aimed at illicit outflows of capital from China,” Sean Norris, Asia Pacific managing director at Accuity in Singapore, told Bloomberg. “It’s aimed at people drawing out money in Macau, going to the casino, betting very little, getting forex from there and moving it.”
Throughout the Chinese mainland consumers hand over personal information to e-commerce, mobile payment and food-delivery apps on their smartphones without giving it a second thought. “They’re not well-educated about how privacy should be important to them,” said Simic Chan, a senior analyst at Fung Global Retail & Technology in Hong Kong. “They feel it’s a norm to have their data collected.”
While China may be leading the way in forcing biometric tracking on consumers, there’s a long trail of countries and companies not that far behind. And as Mastercard’s massive push into biometrics shows, it’s not just governments and technology firms wanting to use it.
Just on the point about China, a Chinese friend who just returned after a trip home, her first for nearly a year, told me yesterday that she was astonished at how within 12 months cash had almost disappeared. She said everyone is using WeChat or similar apps for mobile phone payments, even for the simplest and cheapest of things. Its seen now as a bit of a joke if you take out cash to pay for something. When I said ‘ah, now the government knows about every single thing you do’, she replied that there were three different main apps, and lots of people use all three randomly to make it harder for the companies to know everything about you. Needless to say of course all three are Chinese companies, all deeply imbedded with the government.
I would imagine down the track that when a sufficient number have signed on for biometric identification, an announcement would be made to force the rest to sign up. It would be something along the lines that if you do not have biometric identification attached to your card, that in case of fraud or identity theft that any losses incurred would not be insurable. After all, if you did not use biometric identification, then you were not taking all due precautions and so any losses that you incurred are your fault.
It’s a matter of how much security do you really need. Where I live, one can make credit card purchases under $200 by simply waving the card past the terminal practically everywhere. Nobody is bothered by this.
Re China and WeChat: not often mentioned is that counterfeit bills are a big problem in China, and WeChat solves that problem very efficiently. Concerns about the government knowing your every move through WeChat are somewhat overdone, because just having a cell phone in your pocket already takes care of most of that.
Would love to see the survey questions or, likely, how the survey participants were selected.
I wonder if a survey question like……. if you have a negative opinion of the work the US legislative branch is doing…..please answer the following:
Have US legislators abdicated their duties of office?
Would That question get a 99% affirmative response like the “surveys” above.
I’ve gotten into the “refuse to take surveys” habit. Easy one to get into. And it foils marketers all over the world!
Yes, and politicians. They only use our opinions to craft their lies!
It is not surprising, that the citizens of a totalitarian state, are used to their captivity, Chinese or American ;-(
As I pointed out before, chipped fingerprint data plus PIN … is already used by the US government for access to computer systems. But the cards aren’t reliable nor are the people. The cards frequently have to be reissued, and the people need their PIN reset. Getting a new card, or resetting your PIN, requires vetting, which isn’t as easy as waving your smart phone around. So the cost of this system is considerable.
Yes, if you have a smart phone, the government knows were your smartphone is all the time. But that isn’t enough. We are currently moving to an email system that requires PIN reentry many times per day, just to work at your desk. Putting a felon anklet on you, isn’t necessary.
Trying not to be too cynical, is this push for a cashless society an honest attempt to reign in the effects of black markets, or strictly a narrow focused drive for new profit centers? It is very difficult to tell as black markets have historically been the domain of criminals- actors outside the social norm or government control. As criminality becomes normalized, the lines becomes blurred and the difference between a criminal transaction and a socially legitimate one are removed. In a larger sense, the question becomes what is the function of monetary institutions- to serve the interests of general wellbeing or the narrow interests of individuals.
The issuance of currency is the supreme social power. The drawback is the inherent freedom that physical currency provides for individual action once distributed. Taxes and Physical violence have been the institutional tools used to moderate this individual freedom. How they are used determines the character of the society and the difficulty in performing any social action taken collectively.
The extended use of digital currency seems inevitable under the current political power structures. Even more so because it is value neutral- it is just a tool. It is a tool to herd the social flock. It is not surprising that the vast majority seek convenience over principle when evaluating the merits of a completely digital currency. Frictionless movement within certain social boundaries is a desired goal and is experience as “freedom”. The fact that the boundaries are narrower can be ignored.
Digital currency is just another infrastructure project. Just as IBM computers greatly facilitated the holocaust, digital currency could be looked back upon as the greatest tool for human enslavement ever created- as long as the energy and infrastructure to maintain it remains intact.
It all boils down to what your definition of freedom is. Freedom to shop and to democratize bribery seems the destiny of the West. In the meantime, building social capital is what is left for those who have a different vision of what could be. Digital currency won’t prevent this, only make the road steeper- and the road less traveled.
It’s unsurprising that banks would want biometric data for so many transactions. Apart from the intrinsic value of the data to an industry few customers know about, it would reduce losses for which the banks are responsible. Why customers would want it – assuming they do – is much more difficult to fathom.
Far be it for the banks to explain why an authoritarian government like China’s might want to track its population so minutely. But could they not suggest why citizens there or in so many other places might find such biometric tracking odious and deeply intrusive. Whatever, convenience is a marketing ploy, not a motivator.
Let’s be honest. The push for a cashless society is nothing more than a wish/demand by the people on one side of the financial fence to get 2.75% of every transaction on the planet.
Meet you on the barricades.
Bingo, although the surveillance aspect is a nice bonus for them.
And they aren’t going to stop at 2.75%. I deal with companies who are trying to market new supposedly automated payment processes (they are of course not automated – many merely slough work from a company’s employees to their vendors’ employees). They will insert themselves into the already existing ACH or credit card payment process and or course they also take a cut on top of all the other entities already getting their piece.
Be interesting to know how the question was phrased.
Meanwhile, the USA is still trying to get the hang of “chip cards.”
This seems like deja vu all over again. The US still swipes, but most retailers reject swipes from chip cards. Regardless, signatures are required which are illegible due to the crap technology used. They are also superfluous.
EU was using chipcards for many years before the US banks started “experimenting” with them. Some US retailers still lack chip readers.
This all begs the question of why the most technologically advanced country in the world (By assertion of POTUS hizownseff) is once again following vs leading.