Adoption of biometric payment cards plateaus with niche applications

Biometric payment cards, once seen to be the belle of the biometric ball, are mired in a rut of stagnated adoption, barriers to enrolment and excessive costs, according to a new report from ABI Research, and findings from Goode Intelligence.

‘Further consolidation and/or pulling investment’ more feasible: ABI Research

In a release announcing its publication, Research Director at ABI Phil Sealy says “the reality is that biometric payment cards are not going to become a mass-market solution anytime soon. The high cost, combined with manufacturing and enrollment hurdles, means adoption will remain largely restricted to premium banking customers and niche applications. The industry must recalibrate its expectations and rethink forward-looking strategies.”

ABI Research identifies three primary barriers to mass adoption. Manufacturing complexities mean high production costs and low yield rates. There are pricing limitations: biometric cards currently cost US$15 to $20 per unit, nearly 10 times the price of a standard contactless card. And the lack of a standardized, scalable enrollment process further slows adoption.

“Given these limitations,” says ABI, “vendors such as Idemia, Thales, and Idex Biometrics are looking toward new opportunities, most notably within the access control and crypto cold wallet markets, where security concerns justify the added cost of biometric authentication.”

Sealy says “many ecosystem players have recognized that the payments market is unlikely to deliver the scale they initially envisioned. Despite the shift toward access control and crypto wallets, where biometric security can provide real value, it remains an extremely challenging market.”

The research suggests that “access control and crypto wallet ecosystems and partnerships must be developed and opened quickly.” And it contains a grim forecast: “without any tangible market success over the next 12 to 24 months, further consolidation and/or pulling investment away should be considered a more feasible likelihood.”

Goode Intelligence issues darker forecast for biometric payment cards

Goode Intelligence also sees contraction in the biometric payment cards market. Its recent report on biometric payments is similarly doomy: “GI has previously been bullish on the prospects for biometric payment cards, believing that a combination of strong consumer demand, consequences of COVID-19 to hygiene control in physical spaces (avoid touching a PIN PAD), and a move towards biometrics being the de facto payment authentication mechanism would lead to high levels of adoption,” CEO and Chief Analyst Alan Goode says. “However, high levels of adoption have not been seen and GI has created more conservative forecasts for this technology.”

Goode likewise sees high production costs, certification delays and enrolment challenges as major blocks to mainstream adoption. In order for payment cards to be viable, production and materials costs must come down, a stringent payment card certification scheme must be applied, and there must be a reliable, scalable and cost-effective enrolment process.

Idex not abandoning payments, but survival will depend on access market

The industry recalibration ABI Research notes is already well underway. Major names long associated with cards have shifted toward tokenized payments. Idex Biometrics recently parted ways with its CEO in light of fiscal difficulties, and announced a renewed focus on access control.

However, in comments emailed to Biometric Update, the firm’s newly appointed CEO Anders Storbråten says the company’s shift to access does not mean it is abandoning payments. “Strategic focus will be placed on building the Idex Access business line, and we will be aligning resources accordingly,” Storbråten says.

“We continue to support our partners and are excited to see some of our long-standing efforts in building up the Idex Pay market materializing.” He insists that “business continuity remains a top priority.”

Idex’s woes stem partly from a botched deal with Zwipe, which subsequently filed for bankruptcy, leaving Idex with a loss on receivables of $600,000. The collapse of the deal has been seen as an indicator of the general state of biometric payment cards.

Nonetheless, biometrics on cards are not disappearing, and Storbråten’s optimism may yet pan out. ABI Research predicts that by 2027-2029, the access control and digital wallet alternative markets will “contribute significantly to overall biometric card adoption.” And Goode Intelligence is forecasting just over 90 million biometric payment cards issued by 2030.

In the end, it will come down to how biometrics providers play their cards.

Article Topics

ABI Research  |  biometric cards  |  biometric payments  |  biometrics  |  Goode Intelligence