A version of this article originally appeared in Payment Business Magazine, Nov/Dec 2017
Mobile users are demanding a compelling mobile payments experience but are also less loyal than ever before. To put it simply, users in the mature markets are not simply asking for a mobile payments solution, but instead they desire an improved shopping experience. According to GFK, great customer experience that enables smooth, frictionless and secure mobile shopping will be the catalyst for the mass adoption of mobile payments.
Forrester Research estimates that the market for mobile payments will reach $142 billion by 2019. This growing market is saturated with numerous payment systems that are being adopted at various speeds. Peer-to-peer and point-of-sale payment methods have gained very little traction from both the e-merchants and the consumers. Even in the US, the adoption of in-person mobile payments is relatively slow and very fragmented. It is important to realize that mobile payments are still far from maturity and are clawing their way into an established, complicated ecosystem.
Remote payments are dominating mobile payments market, thanks to the the change in the way consumers shop due to the advent of ecommerce. However, the biggest obstacles standing in the way of wider mobile payments adoption is a combination of high risks of fraud and the conflict between fraud detection and prevention methods and user experience. Finding authentication methods that work on both fronts should be a number one priority for mobile payments providers.
The Importance of Customer Experience
At the very core of many high-tech solutions – especially those related to mobile – is user experience. How can companies create customer experiences that are smooth and frictionless to the degree that they become a competitive advantage?
Obviously, replacing something as simple as swiping your credit card is not straightforward. And it´s not sufficient. If users perceive mobile payments as faster and more efficient than other payment methods, they will likely continue to use it. With regard to increasing mobile payment acceptance, the whole process needs to be easy to understand and easy to use.
Mobile Payment Report 2017 shows that speed and ease of use ranks among the top three criteria of all respondents to make a payment solution attractive. To increase mobile payment adoption, solutions need to prioritize ease of use and reduce unnecessary obstacles. Authentication methods that interrupt transaction flow will no longer suffice.
The Rise and Fall of Apple Pay
Just recently, Apple revealed their next-gen smartphone, the IPhone X, and showed the demo of its facial recognition technology. Sadly, the technology failed miserably. When Face ID – a biometric authentication method based on face recognition – fails, users need to enter their passcodes to unlock their phone, which increases friction and causes frustration. But these technical failures are just one of the issues facing Apple´s latest feature.
Apple's Phil Schiller said that their engineering team "worked hard to make sure Face ID can't easily be spoofed by things like photographs". But although Face ID is relatively new, strategies that could potentially beat it already exist.
Even more so, Apple users would not agree with Schiller´s words. A survey conducted by Juniper Research showed that more than 40% of iOS users in the US will not use the newly introduced facial recognition as an authentication method for mobile payments, namely Apple Pay. In addition to these negative results, as well as the fact that Apple´s recognition technology often fails on people with darker skin, Apple is still trying hard to overcome the ability of spoofing the smartphone with a photograph of the person.
Behavioral Biometrics: Bringing UX and Fraud Prevention Together
Customers want mobile payments that are quick and easy. On the other hand, due to an increased amount of identity fraud attempts, they also demand a very high level of fraud prevention and detection. Current authentication methods that use, static biometrics, passwords or emails as the second factor are problematic from both a security and a user experience side.
That is why behavioral biometrics is becoming a hot trend: it bridges the gap between the UX and authentication
First appearing during World War II, Allied forces used behavioral biometrics to verify the authenticity of telegraph messages they received by identifying operators based on the way they were sending dash and dot signals. Today, behavioral biometrics go much beyond that. Behavioral technology has become so advanced that we are able to analyze many different data types and end-point interactions (such as keystroke patterns, scroll-velocity and touch pressure) behind each transaction.
Static vs Behavioral Biometrics
Another important driver for the acceptance of behavioral biometrics is that it efficiently solves problems of static biometrics. Both traditional methods (such as fingerprint scanners) and cutting-edge solutions such as Apple's Face ID, often fail to accurately authenticate the user behind a transaction. Static biometric data can be easily stolen and used for nefarious purposes.
To make it viable in a real world, a secured mobile payment solution requires a high degree of accuracy that will not generate false alarms, interfere with customer experience or be vulnerable to spoofing.
At the same time, it is no longer enough to authenticate the user “at the gate”. To withstand automated bot and RATs attacks, a secure solution needs to continuously authenticate the user throughout the session. Behavioral biometrics achieves just that by invisibly running in the background without interfering with user experience. Furthermore, it removes step up authentication and risk-based authentication completely while at the same time significantly reducing fraud. By removing this friction and not interfering with the transaction flow, users can do more and spend more throughout each session, having a positive effect on the bottom line.
Napoleon once said, “War is 90% information.” And if we were to translate his words to the field of mobile payment authentication, we reveal the reason of the success of behavioral biometrics approach. Considering the high number of sensors and data sources present in any standard smartphone, the symbiosis of security and customer experience becomes a reality.
The future of payments is increasingly mobile. Users value frictionless experience, and in the world of ever increasing risks the need for continuous authentication methods such as behavioral biometrics will only grow. There is no forced enrollment, no authentication triggers, and hundreds of different (and unique) behavioral variables that can be used to identify the user behind each transaction throughout the session.