Coronavirus to Boost Cashless Society

In the second post of our series on digital exclusion, Art Stewart, Global Head of Sales & Marketing at IDEX Biometrics, discusses how Coronavirus will boost the cashless society.

No one ever doubted the appeal of hard cash. Although it has withstood the test of time (about 5000 years) no romance is ever perfect – cowrie shells were pretty cumbersome and a pocket of coins will pull your pants down. Paper seemed like a good idea – until Covid-19 exposed the risk of catching infections from it. Now more people than ever are trying to avoid cash. In fact, most retailers have stopped accepting cash and have instead started encouraging all customers to use either touch-free card payments or mobile apps.

However, the lack of technology access for vulnerable people in society restricts payment options and with caps on spending limits for touch-free payment cards, the choices become limited.

Why biometric payment cards are the next big thing?

At first sight, biometric payment cards are just like any other store, credit or bank card. The difference is that they incorporate an unobtrusive fingerprint sensor, powered by energy absorbed from the card reader. Biometric cards will only verify themselves to the terminal when a fingerprint, matching the one stored in their memory, is positioned on the reader. There are no remote networks to consult, and the stored print cannot be pirated thanks to sophisticated encryption.

The new generation of biometric payment cards were designed for security, but coronavirus brought to light an additional benefit – they are also contactless, avoiding the need to touch a terminal, a keypad or another human being.

Contact free payment cards have been around for a while, but their popularity has been restrained by low caps on the value of PIN-less transactions allowed by the banks – because of fear of fraud. The security provided by a fingerprint is greater than that of a PIN, so the banks can remove or increase caps on contactless payments.

Mastercard has been one of the payment networks looking at biometric payment cards. Commenting on passwords and PINs, Mastercard’s Vice President Bob Reany recently said “We feel the days of using static information is over”.

It will take payment networks and card-issuers some time to roll out the new cards to everyone, but their compatibility with most existing terminals will make it an easy transition.

Safe as well as secure

The advantages of a secure touch-free card were obvious before the coronavirus pandemic; they are a lot cheaper than a mobile phone and fit snugly into a purse or pocket. They only need to communicate with the nearby point of sale, not to a cell phone network or the servers of a distant bank. They are quicker to use, shortening queues in congested city stores, and they can be used as a means to prove your identity for purposes other than shopping.

The sheer convenience of touch-free cards was enough to generate a 9% growth in their use in 2019. About a quarter of us made occasional touch-free payments before the virus. In the first quarter of 2020 it rose to about half. With biometric payment cards set to remove spending limits, touch-free payment is almost certain to become the new norm in the near future.

Biometric payment cards are also set to benefit vulnerable members of society. Without the need for an expensive smart phone, biometric cards will bridge the digital exclusion gap by providing an innovative, secure payment option.

It isn’t all or nothing. In the event a fingerprint can’t be verified – perhaps because of a hand injury or unsuitable point-of-sale terminal – cardholders can enter a PIN instead. The same applies at ATMs, so owners will always be able to make deposits, check their balance, or even obtain some cash – just for old time’s sake.

The previous post in our series on digital exclusion looked at how zero-touch payments are set to grow post-Covid.