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.
Elevated use of ecommerce drives demand for remote payments and benefits the mobile biometric authentication segment.
The sudden surge in e-commerce (up 31.7% YoY in 2020) and digital transactions has, however, led to a spike in payment fraud which could be partially offset by using remote biometric payments.
As users turn to more hygienic, contactless payment methods over cash and cards that require PINs/signatures, the adoption of biometric contactless cards as well as in-store biometrics should also see significant growth.
The number of Visa contactless card and digital wallet users in the US rose 24% from November 2019-March 2020.
A March 2021 survey concluded that around 30% of respondents only started using contactless cards since the pandemic began.
The Biometric POS terminal segment is the most popular among the start-ups in the space, with Amazon being the only known incumbent present. The segment comprises startups that are pure-play Biometric POS terminal providers who typically offer their own terminal devices (such as Biyo), 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.
The biometric payments industry mainly comprises companies that are yet to gain substantial market traction for their products. The largest are listed players in the biometric payment cards segment, including IDEX Biometrics (valued at around USD 250 million in October 2021), Zwipe (USD 127 million), and SmartMetric (USD 6.7 million). Despite being in existence for over a decade, their technology has not been widely adopted, with SmartMetric yet to generate revenue, even in 2020.
Moreover, the startups in the Biometric POS terminal and Mobile biometrics segments are yet to gain momentum and primarily feature in our watchlist. Accordingly, among the private companies, none have raised more than USD 10 million in funding, and around half of the companies have chosen to bootstrap.
FinGo is a British company that offers finger vein biometric authentication terminals for several use cases, including identity and age verification, payment and loyalty, access and security, and transport ticketing, among others. Users must download the app and can link their bank details and payment cards with their finger veins through a FinGo POS terminal. Thereafter, users can make payments by authenticating their identity through finger veins using a FinGo biometric POS terminal, without needing payment cards or mobile devices. The company has global operations and has also worked with governments in Egypt and the UK for various identity verification schemes.
The company utilizes Hitachi’s biometric identification technology and converts the vein patterns into encrypted, tokenized personal digital ID keys, which are stored on the cloud. FinGo stores each personal information element separately and reduces the risk of data being compromised, compared to having all data stored in a single location.
Its retail terminals are commonly used in college campuses, sports stadiums, bars, and venues requiring memberships, such as gyms and sports clubs. The technology can also be used for unattended retail such as in self-service retail kiosks and vending machines. In March 2022, FinGo partnered with British cashless payment solutions company VMC , to automatically authenticate users’ age at point of sale, thereby enabling unattended retail for age-barred items such as liquor, e-cigarettes, and vapes. It subsequently partnered with NYCE International in April 2022 , to bring biometric identity authentication and payments to the gaming industry, such as in casinos, and automatically authenticate users’ age to comply with regulations.
In addition to the core service of handling payments, FinGo also lets its customers offer prepaid wallets and customer loyalty programs to end customers.
FinGo improved the reach and data security of its platform by partnering with Mastercard in June 2021, to gain access to the Mastercard Payment Gateway Services (MPGS; Mastercard’s offering for its merchant partners to access payment processing and anti-fraud technologies). By accessing the MPGS, FinGo noted that it can reach “millions of merchants” around the globe and is a stepping stone to expand operations in North America, Europe, Asia, and the Middle East and North Africa (MENA).
Biometric POS terminals (palm/fingerprint/finger vein):
Biometric POS terminals (facial/iris):
Biometric POS authentication software:
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, except Samsung, 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. Apple is the largest among the three digital-wallet giants; supported by its first-mover advantage (launched in 2014), it accounted for over 90% of the total transactions handled by the three apps in 2020.
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.
No investor data is available