How do you see the evolution of payment cards over the last three decades? How fundamental are Biometric Payment Cards in the world of payments?

I have lived through the entire landscape of payment cards, including the systemic fraud that existed with magstripe. I was also involved in the transition towards chip and PIN in my role as the Chairman of MasterCard UK at that time. For payment cards, the major challenge has been to move from the highly insecure magstripe technology to a more sophisticated Chip & PIN and contactless technologies.

Initially, it was chip card verification authentication, and then PIN cardholder authentication was added at a later stage. The transition to PIN happened because we couldn't persuade merchants to adopt chip card verification without replacing signature cardholder chip authentication. There was a massive investment from merchants to transition from magstripe to chip and PIN, unlike the biometric switch.

Speaking of biometrics, I have now lived through the early stages of what I believe will be a material change to EMV payments. Fundamentally, issuers always liked the chip and never voted for a PIN to replace signature. They love contactless and hate contactless limits. For me, biometrics is the last piece of the puzzle that maintains chip security and adds the phenomenal convenience of a fingerprint. This in turn removes the massive inconvenience of the contactless limit.

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Chip and PIN had the advantage of mandates being pushed by the scheme. When it comes to biometric payment cards, what role does mandate play?

With the chip and PIN, it was evident that we were solving the increasing rate of fraud. We were solving a massive push from the authorities as they saw fraud going through the roof. This is where mandates came into the picture for pushing merchants to make material investments. They also had the government, security authorities, and community on their side.

Today, biometrics are trying to solve the inconvenience of a contactless limit. The upside here is that we don't require merchant investments, whereas the downside is that we are solving an inconvenience problem which is always a debate on “how big is the problem” unlike the problem of fraud when Chip and PIN cards were launched. With biometrics, we are not solving a global fraud problem as they are very limited in the in-store payments, and this makes the interest from card schemes to push biometrics more limited. However, schemes would also like to extend the life of cards. There is no doubt that a card is still the predominant method of payment.

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Keeping in mind the strong interest from consumers for biometric payment cards, do you think the voice of consumers can start driving innovation?

None of the innovations in payments have been consumer-driven. For example, debit wasn't driven by consumers, it was driven by banks who wanted to expand payments while getting out of cheques. Even chip and PIN weren't driven by consumers, they were driven by banks having massive amounts of fraud and under extreme pressure from authorities.

When it comes to biometrics, the significant advantage is the fact that it doesn’t require investment from merchants, rather issuers need to make the investment. This makes it a better proposition for cardholders although they may struggle with the cost of these card if the banks pass the cost directly to them. On the other hand, merchants are not concerned if it enhances the speed at the point of sale. So, I believe it's a fine balance right now. But at the same time, we need to diversify the risk as banks today are not in an urgent need to issue biometric payment cards. We will need time to reach there, but I have very little doubt that it will happen.

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‍HIGHLIGHTS:
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“Biometrics is trying to solve the inconvenience of the limit placed on contactless limit transactions”

“In the coming years, payment cards will face increasing competition from mobile payments”

“Adoption of biometric payment cards is an easy ‘lift’ for merchants and processors”

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What are the key obstacles in the faster adoption of biometric payment cards?

When it comes to adoption of biometric payment cards, it is an easy task for merchants and processors, and a difficult challenge for issuers. One of the challenges with convenience as a proposition is the fact that it is a personal experience. It strongly depends on one’s lifestyle and preferences.

Ignorance is a big challenge when it comes to biometric. That is because it doesn’t have a megaphone effect yet. This wasn’t the case with the chip and PIN, as people were desperate to fight fraud, and this also prompted the schemes to take a very proactive role. On the other hand, biometric is just an addition to the existing payment cards portfolio by paying some extra cents. Lack of awareness is what we should address. Educating consumers, issuers and other stakeholders in the payments value chain on the value of biometrics is vital.

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Are there some interesting learnings for biometric payment cards that we can learn from the rollout of contactless cards and mobile payments?

When compared to chip and PIN, contactless cards just happened invisibly. None of us even knew about it. Cardholders weren’t aware of the move to contactless until they received a new card, and it had a new badge on it. I don't remember any debate around this as it just happened in the background. Technology did not change at the point of sale. They didn't change the technology or the point of sale. So, it will be difficult to compare biometric with contactless cards or mobile payments. The addition of a biometric will change the cardholder experience. They’ll have add their fingerprint when they receive the card for example!

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With the convenience of mobile payments and E-wallet, what is your take on the future of payment cards?

Mobile phones are closer to people’s lifestyle. Keeping in mind the convenience involved, I believe that payment cards will lose out eventually in the fight against mobile wallets and payments. The future is mobile, and wallets will play an integral part in it. With a single authentication on the phone, a variety of payment options can be opened in the wallet. It is not a one-on-one relationship – there is debit, credit, prepaid and cash deposit. One fingerprint can open all of them. So, the momentum is certainly towards mobile but over an extended period of time, so cards, contactless cards with biometric authentication will be with us for a very long time – the death of cheques was predicted in the 70’s and 80’s but they’re still with us today!

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