Biometrics companies seek position as contactless payments market growth accelerates
Zwipe CEO André Løvestam discussed how recent developments, including the global push to raise transaction limits, have affected the march towards commercializing biometric payment cards in an interview with investment analyst Redeye.
Countries around the world lifting contactless amount limits “automatically raises the use of contactless,” Løvestam points out. Contactless cards are now used by 79 percent of consumers worldwide, according to a recent Mastercard survey. The survey also shows that 46 percent of consumers have moved contactless cards to the top of their wallets, and in addition to addressing hygiene concerns, they are finding contact transactions to be ten times faster than their usual in-person payment methods.
Biometric cards address security concern of higher limits and safety concerns of hygiene.
Asked about the rush of partnerships, Løvestam notes that they are the result of long-term strategy and effort, and emphasizes the importance of the Zwipe Pay One platform, which provides an integrated single-chip solution for lower inlay and manufacturing costs with standard card-making processes.
“We now offer a clear roadmap to a cost that will meet what has often been discussed as a market inflection point of about ten dollars,” Løvestam says.
The company’s collaboration with Idex Biometrics and Idemia is on track for both its time and unit cost objectives, and aims to launch a pilot during 2020.
Accelerated contactless payment adoption resulted in growth of card manufacturing in North America of 3.2 percent to 9.5 billion cards in 2019, according to The International Card Manufacturers Association (ICMA)’s 2020 State of the Card Industry report.
The U.S., being five years behind in the adoption of contact chip payment technology, is now roughly as far behind in contactless payments, according to the report. Between 60 and 70 percent of terminals in the U.S. are now capable of processing payments through contactless NFC processes, but the functionality is yet to be activated in many cases.
The report also discusses the speed to contactless transactions, and the average dollar amounts associated with different payment methods, as well as the emergence of wearable technologies for contactless payments.
Idex Biometrics CEO Vince Graziani discusses the use of contactless payment cards to reduce the risk of COVID-19 transmission in the company’s third post in a series on the shift to a cashless society.
He argues that the many small transactions cash is typically used for come with hygiene and counterfeit drawbacks, and the shift away from cash was already happening.
“The coronavirus could be the tipping point needed for contactless in the U.S.,” says The Futurist Group Founder and CEO Demitry Estrin.
Even before the pandemic, only 2 percent of transactions in Sweden were completed with cash.
On a similar theme, SmartMetric is drawing attention to a market forecast calling for contactless payments with credit and debit cards to grow from $10.3 billion in 2020 to $18 billion by 2025.
The “Contactless Payment Market Global Forecast to 2025” report recently published by MarketsandMarkets predicts a CAGR of 11.7 percent, but the research was completed prior to the COVID-19 pandemic.
“There is little doubt that this Pandemic will have a lasting impact on the psyche of the public to the point that it will most definitely impact consumer tactile behavior going forward,” says SmartMetric President and CEO Chaya Hendrick.
The case for face recognition
Fingerprint-enabled cards are not the only biometric technology vying for a piece of the contactless transaction market, either. Ukraine and Estonia-based facial recognition startup Riddletag is looking to integrate its facial recognition technology with apps offered by banking, retail and insurance companies and gas stations.
The company’s CEO and Co-founder Yuri Holuzynets discussed Riddletag’s currently-paused testing of facial biometric payments with the subway service of Georgian capital Tbilisi and its future plans in an interview with Made in Ukraine Tech Startup Edition. The trial is conducted in partnership with the Bank of Georgia and Visa, and allows travellers to automatically be charged for a ticket as they pass through the systems subway turnstiles as devices provided by Riddletag match them to their accounts. Users must be registered with the Bank of Georgia’s mobile app.
The pilot is ready to be scaled, providing contactless payments throughout the system, once the metro service is relaunched.
Holuzynets suggests that while there is a split between the technology’s “haters” and adopters, the COVID-19 pandemic has made contactless technologies like facial recognition more necessary in the minds of some, and many young people already expected to be offered such services.
Riddletag is planning to move its technology to an online platform to pursue business customers, and grow its 17-person team to support its commercialization.