Biometric payments are evolving authentication from something users own and know (such as PINs/passwords and payment cards/smartphones) to simply who they are.
Biometrics refers to the use of biological measurements and physical characteristics to identify an individual for situations including identity verification, user authentication, and access controls. These technologies are also increasingly being adopted to verify payments, ensuring a secure and convenient method for authorizing payments in person and online.
These emerging biometric payment technologies can broadly be defined as any hardware or software that enables point-of-sale (POS) authentication using unique physical or biological markers to identify users and authorize payments and other financial transactions.
The Biometric POS terminal segment is the most popular among the start-ups in the space. The segment comprises startups that are pure-play Biometric POS terminal providers who typically offer their own terminal devices (such as VisionLabs ), as well as companies offering Biometric POS terminal software that can be embedded into smart devices, and thereby, possibly cater to the mobile biometrics segment (such as Saffe and PopID) as well. In addition to those software players, the mobile biometrics market also comprises identity verification companies (like VoiceVault and Heslo) that offer mobile biometrics.
Disruptors in the payment card segment compete as well as collaborate with incumbents. For instance, IDEX Biometrics offers an alternative smartcard fingerprint sensor to the incumbent Fingerprint Cards but collaborates with card manufacturing companies such as Idemia.
Given the low penetration and infancy of biometric payment adoption, most of the identified startups remain in the seed or early stage.
In-house development followed by strategic partnerships
Incumbents in the biometric payment industry mainly comprise payment card manufacturers, fingerprint authentication sensor and software providers, and tech conglomerates. They have typically developed in-house biometric payment solutions to make their initial entrance, with some players opting for partnerships to expand their offerings and market reach. Most incumbents specialize in a specific segment, however, Samsung is a notable exception which offers both remote biometric authentication and biometric payment card tech.
Biometric payment card manufacturers have relied on partnerships to offer complete card solutions as their in-house offerings only cover a limited part of the value chain. For instance, Fingerprint Cards AB develops fingerprint sensors and software and has, therefore, partnered with payment card manufacturers (such as Thales) and companies providing biometric authentication algorithms (such as Precise Biometrics), to deliver its product to the market. Pureplay card networks (such as Visa, Union Pay, and JCB) do not feature among our incumbents as they neither directly offer biometric payment cards nor the related technology. However, card issuers and tech providers must meet the standards set by the networks to roll out their payment cards. Accordingly, such partnerships remain vital, and leading incumbents such as Thales, Fingerprint Cards AB, Idemia, and Precision Biometrics have partnered with the leading card networks to launch their biometric payment card solutions.
Meanwhile, tech conglomerates look to leverage off of the large customer base for their respective device and product solutions, allowing existing customers to benefit from biometric payments. Leading smart device manufacturers offering digital payment apps— such as Apple Pay and Samsung Wallet— embed biometric authentication to existing digital wallets by leveraging the fingerprint and facial recognition technology of the devices. Google on the other hand, not only uses biometric authentication for its wallet (Google Pay) but also uses biometric authentication software to complete payments done through its browser, Google Chrome.
The in-store biometrics segment had the lowest incumbent presence and includes Amazon Inc’s biometric POS terminal (Amazon One) offered across its own Amazon stores. The company also offers its POS terminal to third-party retailers, with ticketing company AXS being the first to adopt it in September 2021.