Consumers still not sold on biometrics payments security
Biometric payments are poised for significant growth, but substantial consumer security concerns could put its future at risk.
Sixty-one percent of consumers feel that providing companies with their fingerprint and iris information put their personal identity information at risk, according to “Vital Insights into Biometric Payments Adoption,” a report from Transaction Network Services.
In the last year, 15% of adults have made a biometric payment, including a quarter of 18 to 24 year olds. However, many consumers remain wary, especially male consumers in the United States and the U.K. In Australia, women reported security concerns.
The good news is that trust is building, albeit slowly. Adults in the U.S. increased biometric payments usage slightly since TNS’ last survey two years ago. Usage in the last year has been greatest among U.K. adults.
Looking ahead, 68% of consumers believe biometric payments will become more commonplace in the next 2-5 years. Fingerprints were chosen as the most popular identifier overall, the study revealed.
“The industry needs to take measures to both ensure the security of this sensitive information and to convey to consumers what protections are in place,” said Mark Collins, managing director of TNS’ FinTech solutions business in the EMEA region.
“It’s exciting to hear that more than half are willing to use the widening range of biometric identifiers available, which now includes iris and vein scanning, as well as facial recognition and fingerprints,” he added. “Reassurance will be the key to ensuring that biometric payments achieve the successful future that our survey data suggests.”
Retail fraud volume—and cost—on the rise
Retail fraud is escalating at a rapid pace — and so are related costs.
Every dollar of fraud costs merchants $2.94, up from $2.77 a year ago, a 6% increase, according to the “2018 True Cost of Fraud,” an annual report from LexisNexis Risk Solutions.
Mobile commerce continues to be the sector most susceptible to fraud, particularly with identity fraud. For mid- to large-size mobile commerce merchants that sell digital goods, 39% of the fraud losses were from identity theft, including synthetic identities.
The volume of successful fraudulent attempts jumped from a monthly average of 238 to 306 transactions, year-on-year. But there is some good news in that the number of thwarted fraudulent transactions rose from 257 to 313 transactions. But despite preventing fraudulent transactions, retailers are still behind the eight-ball.
“Retailers are more likely to be tracking where they’ve successfully thwarted fraud rather than also tracking where they’ve been able to prevent it from occurring,” said Kimberly Sutherland, senior director fraud and identity management strategy, LexisNexis Risk Solutions. “This approach lessens the overall effectiveness of preventing fraud, given that fraudsters are adept at testing for areas that are less of a focus by merchants, and change their attack points accordingly.”
Other findings include:
• Digital goods merchants who layer core, identity and fraud transaction solutions have lower fraud costs ($2.88 for every $1 of fraud) than those that use only a limited set of core solutions (up to $3.61 per $1 of fraud).
• The LexisNexis Fraud Multiplier, a tool that measures the cost for each dollar of fraud loss, has risen most sharply, year-on-year, among those selling digital goods through the mobile channel. For every $1 of fraud, mid- to large-mobile commerce merchants selling digital goods are hit with an average cost of $3.29, as opposed to their physical goods-only counterparts at $2.78.
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