MasterCard Using Biometric Payments to Combat Fraud

10 April 2016

At a time when payment technology is changing as rapidly as it takes to swipe the credit card in your wallet, many consumers are worried about how new payment methods will handle the threat of fraud. While it would certainly be exciting to pay for things using your car or even just your voice, as recent innovations from Visa and Google now offer, it is important not to let the cart come before the horse and adopt a new payment system before it has proven able to protect your financial data.

Within that gap, MasterCard is making massive strides. Over the past six months, the payments giant has been testing technology that would allow consumers to confirm purchases made from a mobile device with a fingerprint or selfie, bringing a new level of fraud protection to the increasingly popular mobile wallet.

Goodbye, password protection

The technology would replace passwords or PIN codes as the primary means of authenticating payments within smartphone apps. By using a fingerprint scan or facial recognition software to validate a user’s identity instead, MasterCard hopes to shift away from information-based methods of authentication, which are far easier to steal.

In the current model, a password is all that stands between fraudsters and the ability to make unauthorized purchases. With MasterCard’s added layer of security, shoppers would need to scan their fingerprint or hold the camera up to their face (while blinking, so fraudsters can’t break in using a photo of the account holder) in order to authorize a payment, even after logging into their account.

So far, the tech has proven to be a resounding success. After its first worldwide pilot program in the Netherlands, MasterCard announced that 90 percent of participants indicated they would like to replace their passwords with biometric identification permanently. Plus, nearly 75 percent believed the new authentication process would reduce fraud, a factor that is becoming increasingly important as mobile spending continues to rise.

As mobile commerce grows, customer confidence does not

According to e-commerce software company Shopify, about one-third of all e-commerce orders came from a mobile device rather than a computer in 2014, a figure that has undoubtedly continued to grow since. However, consumers remain wary of just how secure these transactions are. Among those who don’t shop on their phones, nearly 40 percent cite security concerns as the primary reason, suggesting MasterCard’s biometrics technology could have an immediate impact on consumer confidence.

The new authentication system will soon be available to those outside the Dutch test group, with MasterCard announcing the technology will be headed to the U.S., Canada and parts of Europe as early as this summer.

While the improved verification process will likely dissuade cybercriminals from committing credit fraud, there is no way to prevent identity theft or fraud altogether. So that you have an extra set of eyes on your credit files when you can’t review them yourself, consider signing up for a credit monitoring service.

Credit monitoring companies can monitor and alert you to certain activity that may indicate fraud, and can even detect if your personal information is being shared on the Internet. While banks are taking more measures to bolster your identity theft protection, such as adding biometric authentication to your credit cards, you can add to your personal security with a credit monitoring service.